Nasdaq Penny Stocks vs. NYSE Penny Stocks – What to Choose?

Nasdaq Penny Stocks

Most investors even if they are totally new to the stock exchange market have all heard of the NASDAQ and NYSE and most assume that these are very similar to each other. In fact, both of these are totally different and knowing how they stand apart will help investors when picking NASDAQ penny stocks or securities from the NYSE.

Both NASDAQ and NYSE are two of the largest security marketplaces in North America and in the world, however how they operate is what makes them stand apart. NYSE (New York Stock Exchange) is located in downtown Manhattan in New York City and trades from 9:30am to 4:30pm Eastern Time Monday through Friday with closings during National holidays. The NYSE has a physical location and is world’s largest trading floor for dealers, or middlemen between buyers and sellers of securities including NYSE penny stocks. NYSE works in a continuous auction format by matching sellers and buyers of certain securities and stocks.

NASDAQ (National Association of Securities Dealers) does not have a physical trading location, so NASDQ penny stocks are traded via a telecommunications network directly between buyers and investors. It is a very technically complicated system allowing parties to carry out transaction in a very fast and efficient manner. NASDAQ is the market maker so buyers and sellers can purchase securities without the auction like it happens on NYSE.

Both stock exchanges have so called traffic control in place to make sure all trades are carried out smoothly and according to rules and regulations. The traffic controllers also watch the order placements and if too many orders get backed up, they actually help dealers clear out the jam.

So how does these similarities and differences affect a penny stock investor and which stocks he should buy, NASDAQ penny stocks or NYSE successful penny stocks? NASDAQ typically deals with high tech penny stock companies that are involved in software engineering, Internet and electronics. While NASDAQ penny stocks are considered more volatile and risky, some investors actually prefer them because they see a lot of opportunities in the Internet or electronics companies of the future. Penny stocks from NYSE are thought to be less risky and more solid. Actually the most blue chip companies started off being as successful penny stocks from NYSE.

From the company’s point of view does it really matter to list stocks for trade on NASDAQ or NYSE? Everything comes down to fees and requirements from individual stock exchanges. NYSE typically charges $250,000 for an entry fee, while NASDAQ penny stocks companies have to pay as low as $50,000. Transaction fees are also an important factor for consideration, while NASDAQ fees cap at around $27,000, at NYSE companies should expect about $500,000 annually. This explains while NASDAQ penny stock lists are filled mostly with start up, growth-oriented companies that simply cannot afford exorbitant NYSE fees.

From the investor’s standpoint, does it matter whether to invest in NASDAQ penny stocks or NYSE ones? It all depends what companies you are thinking of investing. To give you a better understanding, it is worth mentioning that some of the largest corporations in America like Coca Cola, Wal-Mart and General Electric are born and raised NYSE stocks, while some of the largest tech giants like Intel and Microsoft are traded on NASDAQ.

Let’s sum it up to help you decide whether you should go with NASDAQ penny stocks or NYSE stocks:

  • NASDAQ penny stocks represent a larger variety of small cap companies
  • Large and small tech companies list exclusively on NASDAQ
  • Solid giants list on NYSE including Exxon Mobile, IBM while new tech companies like Amazon and Google prefer NASDAQ

In the end what matters is whether a certain company qualifies for your personal top penny stocks to buy list.

Read more about differences between Nasdaq and NYSE trading here.