Stocks
Penny Stock Rules the Investor Should Know
First of all, a penny stock is a stock that is priced between 1 cent and $5 and is traded over the Pink Sheets or the OTC Bulletin Board. These stocks may also trade on foreign and other securities exchanges. However, when trading penny stocks, there are penny stock rules that must be followed that are different from the trading of stocks on the major exchanges.
The Securities and Exchange Commission (SEC) has set forth penny stock rules when trading and these rules are: ?The SEC requires the brokerage firm to obtain a written agreement from the customer regarding the transaction and the customer must be approved to complete the transaction.
?The firm is required by the SEC to provide the customer with a document that outlines the risks of penny stock investing.
?The rules state that the consumer must be notified if there is a market quotation and what the market quotation is for the penny stocks the investor wishes to buy.
?The firm must also disclose to the customer what their commission will be for the trade.
?Penny stock rules also state that the firm must provide the customer with monthly statements that discloses the market value of each penny stock.
These penny stock rules are necessary to ensure proper trading of penny stocks and that the investor is aware of all risks associated with it. The SEC carefully outlines the penny stock rules that brokers must follow in order for the investor to have the best experience possible trading penny stocks by making the investor aware of all risks associated with penny stocks as to not cause them to get in over their head.
In the penny stock rules, there is a Customer Protection Rule (Rule 15c3-3) that states the control all of the money that is paid by the investor is on the hands of the broker. The broker must periodically figure up how much money is being held that belongs to the customer or has been obtained from securities owned by the customer. If the broker determines that there is more money on hand than what is owed to the customer or from the customer to the broker, the money must be placed within a reserve bank account. This money is placed within the bank account for the sole benefit of the customers. This rule is very important because it prevents the brokerage from using funds that belong to customers to fund their own business.
Penny stock rules are designed to protect the customer, the stock market, and the broker. If a broker breaks any of these rules set forth by the SEC, then the broker can be subject to SEC investigations that can result in serious trouble for the brokerage firm. That is why it is important for the investor to be aware of the penny stock rules and make sure the broker is following all rules accordingly so that the investments of the investor are not compromised in any way.
Visit Stock Guru, Penny Stocks.
MORE ARTICLES:
Online FOREX Trading Software - Things To Bear In Mind
There is potential to make a killing in Foreign Exchange Trading or FOREX trading, and more and more people are turning to FOREX as their source of living, with the help of tools to keep them on track - such as online FOREX trading software.
Making Money and Maintaining Wealth With Automatic Forex Software
Money is needed daily and no one is spared from this fact We need money to fulfill one of our utmost requirements which is survival
What Is Stock Trading Software?
Stock trading software is the actual piece of software that is used to accomplish those trades. It is important to understand the differences inherent to the terms. It is a useful tool in managing stock market. It operates as the connection link between trader, online broker and stock market.
Learn To Trade The Forex Now
The advantages of Stock Option Trading Software inside your Day Trading
MACD and Trading Software
MACD stands for moving average convergence or divergence, and is a technical indicator that was first created in the 1970s. The MACD shows differences between a slow and a fast EMA closing prices or exponential moving average. Since the MACD is based on the moving averages, it can sometimes be less than accurate.
Share Trading Software
Gone are the days that share trading required brokers and brokerage firms as mediators for small time investors or even regular players. The boom in Internet technology and especially with the success of Web 2.0, many new avenues for investment have opened up. People can choose from a variety of investments both short-term like Binary options and forex to long term like stocks. However, the stock market has benefited from this technological advancement the most. Share trading software has made stock options that much more lucrative.
How Can You Make Money With Day Trading Software
If you've been hanging around the stock world for long, you have undoubtedly heard of the day trading software This Robot is the latest in a long line of robots that supposedly can beat the stock market
Currency Trading Software-Is it Worth It?
In this day and age, a lot of people are selling currency trading software with claims that their product is more superior compared to other vendors Sure there is really a wide variety of software that claims greater performance
