OTC Penny Stocks

Once you've picked out and analyzed some stocks to buy, be sure to
remember that stocks trading on the New York Stock Exchange and the
American Stock Exchange, are quoted at just one (1) price. That's the
price you'll pay to purchase the stock.

Over The Counter (OTC) stocks have a "bid price" and "ask price".
If you want to buy the stock you pay the ask price. If you want to sell the
stock you pay the bid price. The difference between the bid and the ask
price is called the "spread".

The spread amount can be an indication of how actively the stock trades.
A small $0.03 spread is an indication that the stock trades very actively.
Simply put, this means that if you wanted to sell the stock immediately
after you purchased it, you'd get $0.03 less than you paid for it.

Always avoid buying OTC stocks that have large price spreads. A large
price spread indicates that a stock (is not) traded very actively. This is
easy to remember. Just look at the spread and tell yourself that that's the
amount you'll give away the minute you buy the stock. It works every time.

Here's a good "rule-of-thumb" for acceptable OTC stock spreads.

Stocks costing $0.125 cents to $0.25 cents ......... $0.03 cent spread.
                        $0.26 ...........to $0.75 cents ......... $0.03 to $0.06 cents.
                        $0.75 ...........to $2 dollars    ......... $0.06 to $0.125 cents.
                        $2.00 and up ................................ $0.125 to $0.25 cents.

Again! Stay away from stocks with big spreads. Warning bells should go
off the minute you see it. It's your money. Don't throw it away.

We want to buy and sell stocks that trade on the three major exchanges.
We're only gonna buy a low-price stock that makes a profit, has good
sales, great management, trading at or near it's 52 week low, with good
fundamentals.

The exception to this, will be young undiscovered growth stocks, that are
about to announce new technology or new products, that could propel
the stock to new highs. But even these stocks must meet all the basic
fundamental requirements that we would use to scrutinize any stock.