NYSE Trading of Penny Stocks
NYSE Penny Stock Trading is more difficult than on the Nasdaq. In particular, New York Stock Exchange penny stock trading is not nearly as technically oriented as the Nasdaq or the OTCBB. Technology penny stocks are prime real-estate for the penny stock trader.
In addition, penny stocks here are more likely stocks that are having serious difficulties. Of course exceptions will be discussed for profitable penny stock trading on this exchange.
On this page you will learn about US NYSE trading of penny stocks
NYSE Euronext - is the largest global stock exchange.
NYSE (New York Stock Exchange) is an auction market in that all NYSE trading is facilitated by market specialists (1 market specialist per stock) called a Designated Market Maker (DMM).
The Designated Market Maker's (DMM or Specialist) job is to insure the smooth, efficient and fair matching of buy and sell orders from brokers, traders and investors through the NASDAQ automatic routing system. . .
Universal Trading Platform (UTP) and the NYSE Super Display Book System:
The UTP universally matches all orders across all NYSE Euronext markets the great speed and efficiency.
Electronic Trading of US Nasdaq markets used to be routed through the NYSE owned NYSE Super Display Book System, which automatically processes orders for the US NYSE.
The DMM may trade on the stock he/she is incharge of at times
At times, the Specialist (DMM) may buy and sell share lots of the stock he/she is in charge of in an attempt to provide liquidity or equilibrium of trading for that stock.
Over 80% of the securities traded directly on the NYSE Exchange are accomplished automatically/electronically or by phone by means of a registered member NYSE broker to the broker-specialist of a stock.
The other 20% of the securities traded on this exchange are made through a live auction format: Actual live brokers trading shares by means of the broker-specialist. All are on the floor.
Many registered NYSE member individuals and brokers of trading firms are on the floor buying and selling orders from their retail customers or clients.
The market specialist (floor broker) for a stock is in front matching buy and sell orders - 1 specialist per stock.
A registered NYSE member may also act as a floor broker for the trading of his securities with other NYSE members.
Mostly high end blue chip type stocks are traded in the live auction format.
What has been described is basically how US NYSE trading is conducted.
How an Online Broker Fills US NYSE customer orders:
NYSE trading of penny stocks by extraordinary investors are handled by a penny stock friendly discount broker.
If you conduct your trading of NYSE or AMEX (aka NYSE MKT) stock (auction markets) through an online broker, which most of us do, your online broker has several choices as to how your order will be filled after you press the button to place the order:
• Your order may be executed directly with the exchange electronically to the broker-specialist via the UTP. The broker specialist ensures that all orders are fairly and efficiently matched and filled if possible.
• Your order may be placed with a third market-maker firm. Third marker-maker firms trade similar to the NASDAQ market makers in the quoting of bid and asks and in the buying and selling of shares, but not under the same rules. You will learn about NASDAQ market makers later.
The Third Market Makers may be able to fill your order with a more favorable quote. In addition, your broker may get a commission for directing orders to a particular Third Market Maker.
• Your order may be submitted and filled by one of five regional exchanges if the NYSE or AMEX stock is dual-listed on a regional exchange. The regional exchange likely offers your broker a commission for directing orders to it.
Those five exchanges are as follows:
• Your order may be submitted and filled by one of several or many ECN's (Electronic Communication Networks) if the quote is more favorable to your order. More info on ECN's later.
When placing trades with an online broker.
All of your NYSE trades as a penny stock investor will likely be handled electronically.
Your broker is not submitting your order to a floor broker at the NYSE. Your broker is not waiting on the floor of the exchange to place your order with the specialist. Your order is rather routed to the broker-specialist electronically and matched with other orders to create a fill if possible.
This is all accomplished within seconds if your order is priced within the current trading range for that stock.
Tracking Stocks on the NYSE:
Google Finance and Yahoo Finance are two free internet sources to view real time best bid and ask quoting and charting of NYSE Traded securities. More info on real-time quoting under that sub-topic.
Your broker account. . . Any good brokerage firm will provide free access to real-time quotes and charts that display quotes in seconds, or live, of most securities.
In a later topic, this site gives advice on penny stock friendly online brokerage services.
NYSE (New York Stock Exchange)
The New York Stock Exchange is the largest in the world, and only slightly more regulated than the NASDAQ. The most stable stocks are generally found on the NYSE.
NYSE Trading. . . This exchange can be an excellent source of rocket stock trading opportunities of which only the Extraordinary Investor capitalizes on.
The reason being is that a previously stable $15 or $20 stock could plunge to dollars or mere pennies in a severe sell-off. Such stocks normally will rebound in a short time, and may rebound with a vengeance.
NYSE trading for rocket stock opportunities is not difficult if you search for, monitor and investigate stocks that recently plunged in value. Even so, penny stocks on this exchange are not necessarily less risky than the other exchanges or even the OTC.
NYSE Trading and Risk
Why are NYSE trading of penny stocks not less risky?
For one, many blue chips that were once $30 to $50 stocks may today be trading for pennies to a few dollars.
Such stocks may eventually be delisted from trading on the NYSE for not meeting minimum standards being listed on that exchange, or the stock may rocket or explode in value after being depressed for various reasons.
If the stock is delisted from the NYSE, and begins trading on another exchange or on the OTC market, this in itself will likely cause the share values to trend down even more or will likely be completely dumped by disappointed traders.
Nasdaq trading risks will be discussed in more detail soon.
NYSE Trading: The minimum standards you should watch for that affects a company's listing and its risk profile on the NYSE are as follows:
• The stock price must be over 99 cents
• A pre-tax income under $2 million in the two most recent years in a time of crisis for the company.
• Average market cap (The total number of shares X the share price) must be $75 million over a 30 day period.
• The NYSE stock will have two more letters added to its ticker symbol "BC" if the stock is Below Compliance to be listed on the NYSE.
If the minimum standards of listing are not met, the NYSE review board may extend the company's listing with the NYSE if the company can submit a convincing plan of action to meet minimum requirements by specific time frames which are as follows:
• The company has 18 months to comply with market cap requirements
• The company has 6 months to meet share price of over 99 cents requirement.
NYSE Trading: Distressed NYSE stocks. . .
In time, such distressed stocks may start trading on another exchange - mostly likely the NASDAQ. A delisted NYSE stock may also begin trading on the OTC BB or OTC Pink Sheets.
NYSE Trading: NYSE Trading Strategies for Bad News. . .
Does all this bad news make such a stock a good or bad buying opportunity? The best answer is YES or NO
NYSE Trading: The NYSE penny stock may be a good buying opportunity if. . .
the stock tumbled far below a realistic valuation based on faulty investor perceptions of the entire company and/or its sector because of bad news of 1 or more of the following:
• a minor aspect of the company that is blown out of proportion
• A lawsuit regarding one aspect or product line of the company shed bad light on the entire company
• one or more of its products, or products in development, are failures, which negatively affects the entire company. Such company may still have 3 or more other successful products, or exciting products in development.
• the "sector" the company trades is dumped wholesale. . . "Sector" would be like banking, motor vehicles, metals, energy, mining, green, tech, bio, health, etc.
These stocks are common victims of fad or emotional investing. Such stocks are generally dumped because they are falling out of favor for various reasons.
Do not underestimate this phenomena!
Whole sectors of stocks go through cycles just like individual stocks.
• the stock market in general is in decline
• public perception and demand for the sector this stock belongs to is negative and losing popularity possibly to other new fad sectors of stocks.
• perception of the entire stock market in general is negative and negatively affects all NYSE trading.
• political/government policy and intervention is unfavorable.
• one, or a combination of the above reasons can make stocks tumble in value creating negative NYSE trading temporarily.
Other factors affecting NYSE trading in a bad way can include a nationwide or worldwide depression or recession, of which we are presently experiencing and possibly recovering from.
In reality, the faulty or irrational or even realistic investor perceptions in this case that caused mass panic selling of shares in a good company are temporary and likely, although realistic at the time, are likely blown out of proportion by mass media.
The panic selling of shares will be temporary until further information reveals how good the company and/or sector of stocks is.
NOTE: If and when a whole sector of stocks falls out of favor and shares of such companies are dumped wholesale:
Recovery from such a brutal sell-off - especially if the sell-off occurred over many months - may take 3 or more years. Such sector wide cycles of trends affects all trading, not just NYSE trading
When its a good buy. . . The only way to know for sure whether a penny stock on the NYSE is a super buy - before everyone else does - is to research the company and trend data yourself.
Investigate any fundamentals that help the mind understand and accurately foresee the next trend with the proven strategies this site is revealing to you.
Do not just follow the crowd of other traders
Do not join the band wagon of follower investors.
Mass followers leads to mobs and stampedes creating lemming like severe sell-offs or buying binges.
The Extraordinary Investor waits for massive sell-offs in sectors of stocks and in individual stocks.
• He then screens the stocks in that sector for jewels that were dumped unfairly and that have great potential.
• He invests in target stocks at the right time after all research is complete.
Such investor only purchases stocks that research shows:
• has the greatest potential to explode in value soon
• shares that have hit bottom and are trading at bargain prices
NYSE Trading: Sector Trading Trends. . .
In the case of brutal sell-off that lasts over a period of months of an entire sector of stocks, you may have to wait a while before investing in such stocks. The downtrend may take several months to several years or even more before they hit rock bottom or begin a recovery.
Take time to research such negative sector sell-offs in the financial markets in the past 20 or so years. This all happens in cycles. . .
Look what happened to mining stocks 1970's - 1980's, then again from the 1990's to 2012 for another huge still ongoing cycle for gold and silver stocks.
Look what happened to technology stocks in the past 6 years, or the banks stocks and automotive stocks in 2008-2012.
There are many more such cycles. Some sector cycles may never reverse... I am thinking oil stocks.
Even so, individual stocks within such sectors will experience temporary explosive trends upwards, but nothing approaching the glory when out of favor stock sectors once traded 20 or more times their values.
The Extraordinary Investor searches for potentially explosive stocks in an out-of-favor stock sector as the best low risk high profit trade opportunities.
NYSE Trading: Once the bottom is hit. . .
the stock may continue to trade sideways for months or years confirming that bottom. In the mean time, the stock's share prices will trade up and down, but always end up trading lower on average. This is a good time to monitor fundamentals carefully for NYSE trading re-entry with a focus on the best of those types of stocks for rocket stock profits.
While waiting for the opportune time, find other penny stocks to trade on the OTCBB or Nasdaq.
In the case of a huge 1 day plunge of a stock you are watching, the bottom is where the plunge ends. Most likely the stock price will recover at least 15% to 30% in the near term after such a plunge in price.
This short term plunge can be caused by various circumstance. For instance:
• The company secured financing through the selling of a huge number of shares to investors without warning.
• Major negative media coverage may cause a temporary sell off by shaky investors.
• News by a company that they may soon reverse split the shares of stock. In this case, a frenzy sell-off may occur, but will quickly recover in the short term, then eventually trade lower and lower.
Things like this create solid low risk buying opportunities for NYSE trading of outstanding penny stocks, and really works for trading on any other financial market.
In all such cases, the stock will recover at least a third of the sell-off loss within a very short time.
NYSE trading: Research each stock using the proven investment strategies. . .
You are being programmed to utilize the proven extraordinary investment strategies on this site. Your mind is comprehending such strategies.
These extraordinary strategies are for penny stocks no matter where they trade. NYSE trading of penny stocks is somewhat different but predictable using the trading strategies on this site.
This site is creating in you the innate ability to profit from these exciting opportunities. Rather than being a victim of risks, you are learning to take advantage of the risks others take, and you will profit repeatedly at their expense.
NYSE TRADING - Watch the Lemmings, but don't follow them!
Stampedes and mobs are irrational and are commonly wrong, getting a lot of follower lemming type investors hurt or slaughtered.
Only about 3% double and triple their investments repeatedly from such hysteria, while 97% lose money or make mediocre profits.
I repeat - do your own research.
Do not let marketeers or other seemingly investment media professionals tell you how good or bad the company is, or how you should invest. Don't let them put you under the same hypnotic lemming like suicidal behavior as they do most other investors.
Take advantage of lemming traders patiently waiting for them sell their shares in a sell frenzy. Then, if the stock has potential and was unreasonably sold off, then BUY up those shares at bottom prices.
NYSE Trading: The Follower Investors. . .
The similarities of risks, followers traders are common to all financial markets. The risks are the fault of the follower traders, and include swing traders, investment pigs, many technical traders, novice traders, and semi-fundamental traders.
NYSE Trading and the Extraordinary Investor. . .
There are genuine low risk strategies to the NYSE trading of penny stocks. Only the Extraordinary Investor will know what is really going on with that NYSE penny stock, or any penny stock, and invest appropriately.
Such investors have a proven structure in place to test target stocks against appropriate fundamental and technical data. All of these investment strategies are fully revealed on this site.
NYSE Trading: When not to buy. . .
The NYSE penny stock may not be a good buying opportunity if the stock being dumped is:
• heading for bankruptcy
• irreversible financial distress with no political or public/private financing or bail-out in sight
• is already in bankruptcy
• is being sued (perhaps a class action law suite) for a serious legal violation that could cause the company to lose most its value and/or cause the stock to be de-listed.
• its major product or products are no longer the fad, or being replaced by better alternatives from competition.
All such stocks are very risky to invest in, but watch for any hint of good news that eventually could send the extremely oversold stock shooting for the moon!!!
Watch for extremely depressed NYSE penny stocks, because the right ones will be the rocket stocks of which you can profit from.
For instance, products being outdated, or a major law suit pending could easily be overcome by ambitious and creative management. How do such companies historically handles such negative news? Find out if management is creative historically.
NYSE Trading: Read between the lines. . .
For instance, even if the company looks to be heading for bankruptcy, is that really likely to happen?
Will the government or other VIP sources and partners allow it to happen?
Will management be able to avert disaster?
Consider the potential of its products, partnerships and financing (private, government, public, commercial). Things like that.
NYSE Trading: Other factors to consider. . .
The factors you need to avoid risks and determine a stock's investment value were repeatedly listed and discussed elsewhere and will be outlined under the Blue Button. All of these strategies work with NYSE Penny stocks.
Proper mindset, strategies, knowledge, research and experience are all vitally important to give your mind all the information it needs to realistically understand and evaluate the reasons ahead of time if a seemingly devalued NYSE stock is a bargain or not.
NOTE: A similar search must be made for any penny stock trading on any financial exchange you are considering investing in.
You have now completed this subtopic on:
The next stock exchange you will be studying is the AMEX, which is now called the NYSE MKT. NYSE MKT Penny Stocks are of very good quality, but trading them can be risky if you do not know the NYSE MRKT environment in which they trade.
I wrote about NYSE MKT Penny Stocks to prepare you for successful low risk trading of these quality penny stocks
When you are ready, please continue to the next lesson.