Better Alternative Trading System (BATS)

Finance a la shmoop what is a penny stock? well in England did it be a

farthing stock in Japan yen stock in Somalia put up your hands and give me

your stock stock all right well what do they all have in common except maybe the

Somalian one well their stocks that trade for an extremely low value or [Penny stocks definition appear]

amount of money per share and not necessarily just a penny could be a dime

or 27 pennies but very small amounts and most will define a penny stock as

anything trading under $1 a share why well because then it's value can be [Pennies falling]

described in terms of pennies and because it's living in the delisting red

zone where most exchanges will simply stop trading in the stock unless the

company does a meaningful reverse split ie where they go from 200 million shares

trading at a buck each to having say 50 million shares out there trading at 4

bucks each right the total value the company didn't

change just the number of shares went down by 4x and the value went up by 4x

right well one big element of penny stocks is the cost of trading them and [Man discussing penny stocks]

you see this issue brilliantly illustrated by Leo in the wolf of Wall

Street... but if you're paying 4 cents a share Commission

to buy a share of IBM which trades for like a 150 bucks in change of

share and those four cents are a rounding error but if you're a retail

customer paying five cents a share Commission for a 30 cent stock well your

commission is enormous like some 20 ish percent of the total value spend five

grand buying grappling hooks.com and a thousand bucks of that dough goes into

the pocket of Leo or some other bucket shop player selling you those shares

while penny stocks may seem cheap just because they're cheap per share and if

you believe this kind of math we have this really amazing bridge we'd love to

sell you right here...[Bridge explodes and tumbles]