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A penny stock is a stock that trades at a relatively low price and market
capitalization, usually outside of the major market exchanges. These types of stocks
are generally considered to be highly speculative and high risk because of their lack
of liquidity, large bid-ask spreads, small capitalization and limited following and
disclosure. They will often trade over the counter through the OTCBB and pink
sheets. The term itself is a misnomer because there is no generally accepted
definition of a penny stock. Some consider it to be any stock that trades for pennies
or those that trade for under $5, while others consider any stock trading off of the
major market exchanges as a penny stock. However, confusion can occur as there
are some very large companies, based on market capitalization, that trade below $5
per 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 speculative
shares. The company will also generally be subject to limited listing requirements
along with fewer filing and regulatory standards.

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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) equity
securities. An OTC equity security generally is any equity that is not listed or traded on
NASDAQ 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)

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The Pink Sheets is a centralized quotation service that collects and publishes market
maker quotes for OTC securities in real-time. Pink Sheets is neither a Securities and
Exchange Commission (SEC) Registered Stock Exchange nor a Broker-Dealer

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Pink Sheets and the OTCBB are competing quotation services for OTC securities. Pink
Sheets is a privately owned company, while FINRA operates the OTCBB. Unlike the
OTCBB, issuers do not have to be fully reporting companies with the Securities and
Exchange Commission (SEC) to be quoted on Pink Sheets. The Pink Sheets' OTC
Dealer provides market makers with dynamic tickers and quote montages and an
electronic trade negotiation system, while the OTCBB does not provide this
functionality.
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Market orders are orders to buy or sell stock immediately at the best available
current 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 the
minimal work brokers need to do. Be wary of using market orders on stocks with a
low 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 may
end up paying a whole lot more than you originally anticipated! It is much safer to
use a market order on high-volume stocks.

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Limit orders are orders placed with a brokerage to buy or sell a set number of shares
at 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 to
more specifically as a buy limit order, or a sell limit order. Limit orders typically cost
more than market orders. Despite this, limit orders are beneficial because when the
trade goes through, investors get the specified purchase or sell price. Limit orders
are especially useful on a low-volume or highly volatile stock.

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A stop loss order is an instruction to sell at the best available price after the price goes
below 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 the
value 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's
losses (if the stop price is at or below the purchase price) or lock in some of the
investor's profits.

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A stop limit order is an order placed with a broker that combines the features of stop
order with those of a limit order. A stop-limit order will be executed at a specified
price (or better) after a given stop price has been reached. Once the stop price is
reached, 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 the
stop price.

A stop order is an order that becomes executable once a set price has been reached
and is then filled at the current market price. A limit order is one that is at a certain
price or better. By combining the two orders, the investor has much greater precision
in executing the trade. Because a stop order is filled at the market price after the
stop price has been hit, it's possible that you could get a really bad fill in fast-moving
markets.

For example, let's assume that ABC Inc. is trading at $40 and an investor wants to
buy 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 and
turns 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.

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An order to buy or sell a security at a set price that is active until the investor decides
to cancel it or the trade is executed. If an order does not have a good-'til-canceled
instruction then the order will expire at the end of the trading day the order was
placed.

In most cases, GTC orders are canceled by brokerage firms after 30-90 days. This
type of order is traditionally placed at price points away from the price of the stock at
the time the order is placed. For example if a stock you hold is currently $40 but you
believe 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 any
point over the next few months your shares will be sold.

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A trading service consisting of real-time access to the quotations of individual market
makers registered in every Nasdaq listed security, as well as market makers' quotes in
OTC Bulletin Board securities. This allows you to watch the trades being executed right
in front of you. Also known as Level II.

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A price chart that displays the high, low, open, and close for a security each day over a
specified period of time..
There are many trading strategies based upon patterns in candlestick charting.

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Fundamental analysis is a method of evaluating a security that entails attempting to
measure its intrinsic value by examining related economic, financial and other
qualitative and quantitative factors. Fundamental analysts attempt to study
everything that can affect the security's value, including macroeconomic factors (like
the overall economy and industry conditions) and company-specific factors (like
financial condition and management).

The end goal of performing fundamental analysis is to produce a value that an

investor can compare with the security's current price, with the aim of figuring out
what sort of position to take with that security (underpriced = buy, overpriced = sell or
short).

This method of security analysis is considered to be the opposite of technical

analysis. Fundamental analysis is about using real data to evaluate a security's
value. Although most analysts use fundamental analysis to value stocks, this method
of valuation can be used for just about any type of security.

For example, an investor can perform fundamental analysis on a bond's value by

looking at economic factors, such as interest rates and the overall state of the
economy, and information about the bond issuer, such as potential changes in credit
ratings. For assessing stocks, this method uses revenues, earnings, future growth,
return on equity, profit margins and other data to determine a company's underlying
value and potential for future growth. In terms of stocks, fundamental analysis
focuses on the financial statements of the company being evaluated.

One of the most famous and successful fundamental analysts is the Oracle of
Omaha, Warren Buffett, who is well known for successfully employing fundamental
analysis to pick securities. His abilities have turned him into a billionaire.
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Technical analysis is a method of evaluating securities by analyzing statistics
generated by market activity, such as past prices and volume. Technical analysts do
not attempt to measure a security's intrinsic value, but instead use charts and other
tools to identify patterns that can suggest future activity. Technical analysts believe
that the historical performance of stocks and markets are indications of future
performance.

In a shopping mall, a fundamental analyst would go to each store, study the product
that was being sold, and then decide whether to buy it or not. By contrast, a technical
analyst would sit on a bench in the mall and watch people go into the stores.
Disregarding the intrinsic value of the products in the store, the technical analyst's
decision would be based on the patterns or activity of people going into each store.

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Support is the price level which, historically, a stock has had difficulty falling below. It
is thought of as the level at which a lot of buyers tend to enter the stock.

Often referred to as the "support level".

If the price of a stock falls towards a support level it is a test for the stock: the
support will either be reconfirmed or wiped out. It will be reconfirmed if a lot of buyers
move into the stock, causing it to rise and move away from the support level. It will
be wiped out if buyers will not enter the stock and the stock falls below the support.
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Resistance is the price at which a stock or market can trade, but not exceed, for a
certain period of time.

Often referred to as "resistance level"

The stock or market stops rising because sellers start to outnumber buyers.

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