If you are looking to trade penny stocks be advised that they are traded on the OTC market, which means that you should make inquiries before undertaking this kind of transaction.  The first thing to know is there will probably be two asking prices and two bid prices, also known as the “inside” and the “outside” ask bid.  By having these different prices you are able to negotiate the price for the stock you want to purchase.    The “spread” is known as the difference between the bids.  This amount is where penny brokers, although penny stocks are rarely bought and sold with the aid of such a person (but it has been known to happen), try to make their money.  They do this by selling the stocks to you at the higher price, but inform the company that you bought them for the lower price and they profit from the difference. 

If you can undertake the task of completing this type of transaction without their aid you will most likely benefit from it in the long run.  In some instances, using a penny broker is better for you.  Such as the case if you are new to buying or trading penny stocks, a broker could be very valuable because of his or her knowledge of the field.  Although they do charge a fee, it may still be better for you in the long run. The fees a broker may charge can include mark up pricing’ that is when a broker has retained penny stocks in an account in attempts to shield them from the ups and down of the regular market.  The broker then proceeds to offer them to you with a bit of an increase in the price, yet you do not have to worry about the risks that come with buying/trading penny stocks.