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Ganesh Imp

Ganesh Imp

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Published by Shankar Vannier

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Published by: Shankar Vannier on Apr 11, 2011
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What are Penny Stocks?
 A penny stock is a stock that trades at a relatively low price and marketcapitalization, usually outside of the major market exchanges. These types of stocksare generally considered to be highly speculative and high risk because of their lackof liquidity, large bid-ask spreads, small capitalization and limited following anddisclosure. They will often trade over the counter through the OTCBB and pinksheets. The term itself is a misnomer because there is no generally accepteddefinition of a penny stock. Some consider it to be any stock that trades for penniesor those that trade for under $5, while others consider any stock trading off of themajor market exchanges as a penny stock. However, confusion can occur as thereare some very large companies, based on market capitalization, that trade below $5per share, while there are many very small companies that trade for $5 or more.The typical penny stock is a very small company with highly illiquid and speculativeshares. The company will also generally be subject to limited listing requirementsalong with fewer filing and regulatory standards.
What is the OTC BB?
 The OTC Bulletin Board® (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equitysecurities. An OTC equity security generally is any equity that is not listed or traded onNASDAQ or a national securities exchange. OTCBB securities include national,regional, and foreign equity issues, warrants, units, American Depositary Receipts(ADRs), and Direct Participation Programs (DPPs)
What is the Pink Sheets?
 The Pink Sheets is a centralized quotation service that collects and publishes marketmaker quotes for OTC securities in real-time. Pink Sheets is neither a Securities andExchange Commission (SEC) Registered Stock Exchange nor a Broker-Dealer 
What¶s the difference between Pink Sheets and OTC BB?
 Pink Sheets and the OTCBB are competing quotation services for OTC securities. PinkSheets is a privately owned company, while FINRA operates the OTCBB. Unlike theOTCBB, issuers do not have to be fully reporting companies with the Securities andExchange Commission (SEC) to be quoted on Pink Sheets. The Pink Sheets' OTCDealer provides market makers with dynamic tickers and quote montages and anelectronic trade negotiation system, while the OTCBB does not provide thisfunctionality.
 
What is a market order?
 Market orders are orders to buy or sell stock immediately at the best availablecurrent price. A market order is sometimes referred to as an "unrestricted order".A market order guarantees execution, and it often has low commissions due to theminimal work brokers need to do. Be wary of using market orders on stocks with alow average daily volume: in such market conditions the ask price can be a lot higher than the current market price (resulting in a large spread). In other words, you mayend up paying a whole lot more than you originally anticipated! It is much safer touse a market order on high-volume stocks.
What is a limit order?
 Limit orders are orders placed with a brokerage to buy or sell a set number of sharesat a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.Depending on the direction of the position, limit orders are sometimes referred tomore specifically as a buy limit order, or a sell limit order. Limit orders typically costmore than market orders. Despite this, limit orders are beneficial because when thetrade goes through, investors get the specified purchase or sell price. Limit ordersare especially useful on a low-volume or highly volatile stock.
What is a stop loss order?
A stop loss order is an instruction to sell at the best available price after the price goesbelow the stop price. A stop loss price is always below the current market price. For example, if an investor holds a stock currently valued at $50 and is worried that thevalue may drop, he/she can place a sell stop order at $40. If the share price drops to$40, the broker sells the stock at the next available price. This can limit the investor'slosses (if the stop price is at or below the purchase price) or lock in some of theinvestor's profits.
What is a stop limit order?
A stop limit order is an order placed with a broker that combines the features of stoporder with those of a limit order. A stop-limit order will be executed at a specifiedprice (or better) after a given stop price has been reached. Once the stop price isreached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.The primary benefit of a stop-limit order is that the trader has precise control over when the order should be filled. The downside, as with all limit orders, is that the
 
trade is not guaranteed to be executed if the stock/commodity does not reach thestop price.A stop order is an order that becomes executable once a set price has been reachedand is then filled at the current market price. A limit order is one that is at a certainprice or better. By combining the two orders, the investor has much greater precisionin executing the trade. Because a stop order is filled at the market price after thestop price has been hit, it's possible that you could get a really bad fill in fast-movingmarkets.For example, let's assume that ABC Inc. is trading at $40 and an investor wants tobuy the stock once it begins to show some serious upward momentum. The investor has put in a stop-limit order to buy with the stop price at $45 and the limit price at$46. If the price of ABC Inc. moves above $45 stop price, the order is activated andturns into a limit order. As long as the order can be filled under $46 (the limit price),then the trade will be filled. If the stock gaps above $46, the order will not be filled.
What is a Good µTill Canceled Order?
 An order to buy or sell a security at a set price that is active until the investor decidesto cancel it or the trade is executed. If an order does not have a good-'til-canceledinstruction then the order will expire at the end of the trading day the order wasplaced.In most cases, GTC orders are canceled by brokerage firms after 30-90 days. Thistype of order is traditionally placed at price points away from the price of the stock atthe time the order is placed. For example if a stock you hold is currently $40 but youbelieve it will go to $50 at which point you will sell then, you can use a GTC order.Once the GTC order to sell is placed, if the price of the stock reaches $50 at anypoint over the next few months your shares will be sold.
What is Level 2?
 A trading service consisting of real-time access to the quotations of individual marketmakers registered in every Nasdaq listed security, as well as market makers' quotes inOTC Bulletin Board securities. This allows you to watch the trades being executed rightin front of you. Also known as Level II.
What is a candlestick/ candlestick chart?
 A price chart that displays the high, low, open, and close for a security each day over aspecified period of time..

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