Where They Trade

The stock markets like the New York Stock Exchange have very strict rules about which companies can actually trade on them. In addition, they monitor the company for what it is before allowing the company to be traded. What does that mean? It means that companies such as those that trade with penny stocks do not meet the criteria of the stock market to the degree that allows them to participate.

In other words, companies that trade in penny stocks do not necessarily have the assets, the business history or the net worth to be traded on the New York Stock Exchange or on other stock markets. Thus, they must be traded elsewhere.

Penny stocks are not traded on the stock market but they are still traded. In fact, they are traded as part of what is called the OTC. OTC stands for Over the Counter markets.

OTC markets can be part of the NASDAQ which is the National Association of Securities Dealers Automated Quotation. The NASDAQ National Market or NNM is made up of part of the OTC market.

Yet, there are some changes there, too. Often, the NASDAQ changes its rules, so to speak, allowing in penny stocks when they did not. Or, they may decide to change from allowing to not allowing any longer. Needless to say, the number of penny stocks that are on the NASDAQ in any given time changes readily.

So, at this point, you know that you can purchase penny stocks on the OTC markets. These would be non-NMN penny stocks. In addition, you can purchase them through some parts of the NASDAQ market as well. In just a minute, we will touch on the third method of investing in penny stocks besides these two methods.