How Do I Purchase Canadian Penny Stocks?

If the trends in the North American stock markets continue, then Canadian penny stocks are the best investments at the moment. Just like all investments in microcap shares, however, you must take an educated approach to these Canadian non-marketable securities. Keep in mind that penny stocks by any other country of origin is still just that - penny stocks with inherently high risks for losing all of your capital investment in a single trade.

Let's look on the bright side first of Canadian microcap shares. These shares are increasingly becoming popular for many good reasons that even the seasoned investors who have previously shied away start to take notice.

The best reason for investments in Canadian penny stocks lies in the fact that the Canadian economy is the one of the strongest in the world despite the global recession that continues to affect even its mighty neighbor to the south. Take note that stock market performance depends in large part on the economy so the stronger the latter, the better for investors and traders.

Another reason for investing in Canadian stocks is tighter government regulations enforced on a relatively smaller market. In contrast, the US market arguably has laxer regulations despite its older existence and larger scope - not exactly the best environment for legitimate investors.

If you are a US-based investor, you may think that it may not be legal to trade in Canadian penny stocks. This is not so, fortunately, or else you will be missing out on the profit opportunities. You have three options in this case:

Purchase the stocks of Canadian companies listed on the Pink Sheets. We cannot overemphasize that the Pink Sheets route is the riskiest simply because these are unregulated by government agencies including the SEC. Extreme caution is advised.
Open an online account with a Canadian stockbroker. This is the direct route to gaining entry into the stock market of our neighbor to the north. Just make sure that the stockbroker has a good reputation in the industry.
Open an account with an American stock brokerage firm offering access to Canadian penny stocks. Ask your current broker about this service so that you can skip the oft-tedious job of choosing the right professional to handle your account.

Be sure to consider the merits and demerits of each option. For example, trading through the Pink Sheets or through a United States brokerage firm will result in savings on the cost of the currency exchange of the transactions. Also, it should be noted that the stocks for the last two options are usually listed on the Toronto Stock exchange (TSX) Venture Exchange since the issuing companies did not yet meet the rules and regulations for the listed organizations on the TSX itself.

Now that you know where to purchase the Canadian penny stocks, your next step is choosing the most profitable of these non-marketable securities to add to your portfolio even for just the short-term period. In a way, making the choice should be easy if and when you know how to make successful trades in the US market - just apply similar principles and you should make a killing in the Canadian market as well.