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Penny Stock Basics
Pros and Cons of MicroCap Investing
Strategy
Screening and Research
    Many more similarities exist than do differences when it comes to capital markets around the
    world, but for many in the U.S., there exists two types of stocks, those that appear in their daily
    newspaper, and those that do not.  An assumption is usually made that all of the stocks listed
    in the newspaper are the most widely held and the most active available.  A second
    assumption would follow that Unlisted stocks are the most thinly traded with no transparency
    and are the hardest to get in and out of, especially out.  Both of these assumptions would be
    false, especially if we consider the facts.  Each day, 1000’s of unlisted stocks see more dollar
    volume than 1000’s of listed stocks.  In fact, the similarities between listed and unlisted
    stocks are those that provide security and transparency, such as real time level II quotes and
    SEC filings.  The differences are minimal, and include several positives for the average retail
    investor.
     The most observable difference between listed and unlisted stocks is in and of itself a very
    big positive for traders, and is the idea that unlisted stocks do not have any threat of being
    delisted, as listed stocks do, and their only goal is to become listed, which is always
    constructive for shareholders as opposed to becoming delisted.  Nevertheless, this carefree,
    anything goes environment can be similar in nature to the Wild West, and one will definitely
    need to be well prepared.  Every assortment of possible ranges of compliance with respect to
    timely reports to shareholders and the SEC can be witnessed in the unlisted world.  You will
    find that the most heavily traded stocks will usually be the ones filing the most complete
    reports.  This is no different than in the listed world, there are just a lot more people willing to
    cover listed stocks, which is exactly why their rules are a lot more stringent.  You may not have
    ten different analysts initiating buy and sell coverage on your stock in an unlisted
    environment, and you may not have a special congressional investigative committee to audit
    your companies financial documents, however, making your own independent decisions in
    this setting becomes a lot easier.  Light coverage and lack of man power are aspects that
    one needs to keep in perspective when deciding how much of their overall portfolio to allocate
    towards Penny Stocks and the unlisted world.  With every bit of added risk, however, comes
    added reward potential.
    Without dissecting the different components of the unlisted world, one clear difference is the
    lack of early morning and after hours trading opportunities.  You simply cannot trade OTC BB
    or Pink Sheet stocks before 9:30AM EST or after 4:00PM EST unless you are a market maker.  
    Liquidity providing firms will sometimes trade shares between themselves just before or after
    market hours, and these stocks will often be big movers throughout the regular trading day.   
    The actuality that these stocks will not budge for more than thirty-two and a half hours a week
    is a blessing in disguise, considering how much attention they should receive in ones
    portfolio.  Checking the price of your stocks several times throughout the trading session is
    essential as this is not the place to practice buying and holding, but at least when the bell
    rings there is a definitive end until the next trading session begins.  All in all, trading unlisted
    stocks requires a little extra effort, however, every tool that you need is available, you just have
    to be willing to look a little further than your daily newspaper.
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