Sure, some skilled traders make money — others can even make a living with these momentum plays. But it can be a disaster for beginners. Even the “pros” can lose big money making these risky bets. If you don’t know what you’re doing, you could wipe out your savings in a matter of minutes with one bad trade.

Thankfully, you don’t have to be a day trader to make money on the bulletin boards. In fact, you actually have a better chance of seeing gains on your over-the-counter trades if you look toward stocks that trade for a little more than a few cents a share.

I call these “mature” bulletin board stocks. And no, they’re not the blue chips of the OTC. They’re actually bulletin board stocks that trade in the sweet spot — just creeping over $1 per share. Statistically, these mature bulletin board stocks have shown more gainers than their smaller counterparts.

Check out this price-to-gains comparison…these are statistics pulled form last Thursday’s trading session:

As you can see, when it came to the smallest of the small stocks, the losers outpaced the gainers for the day, while most of these tiny shares remained unchanged or simply did not trade at all that day. But as you move up in price, the percentage of gainers over losers increases.

But don’t think you’ll be sacrificing big gains for consistency. These mature bulletin board stocks can show you huge short-term profits just like the sub-penny momentum stocks can. Just look at the big gainers from that same day:

These top-five gainers show us that making the big money is still possible with the “big” penny stocks. If we apply our same stock-picking criteria to these bulletin board stocks as we do with companies that trade on major exchanges, we can look forward to big gains — and a newfound sense of security.

Best,
Gunner
July 2, 2007

Investing in Penny Stocks was originally featured in the Penny Sleuth.