About Penny Stocks

Penny stocks are often considered to be stocks that are traded for under $5 a share. Penny stocks have become popular because of their potential to bring in massive gains with little investment (imagine a 10 cent share rising to $10.00). On the other hand, penny stocks have also been known to be unpopular due to the risks involved such as lack of corporate transparency and stock volatility due to stock promotion and pump and dump schemes. Buying a penny stock is not unlike buying a regular stock; the main difference is that penny stocks trade on different market exchanges so one will need to know where their stock of interest is trading before setting up an order. Furthermore, penny stock traders are not slowed down by strict requirements when it comes to trading their shares.