What are penny stocks?
Penny Stocks are low-priced stocks of small companies. The stocks trade for less than $5 per share. They are not traded on the major exchanges such as the New York Stock Exchange or NASDAQ. Rather they are found on over the counter listing services (OTC). Penny Stocks are among the riskiest types of stock investments available; these companies have fewer shareholders than large companies, and because of that, any significant change in demand for the shares can send the stock price soaring or crashing. This is also the reason investors are drawn to them. Theres always the possibility of the share price doubling or tripling in a short period of time, even in just a few days. Penny stocks can offer a lot of excitement for a small dollar investment. Investors truly enjoy the process of trying to uncover a penny stock that is about to explode in trading volume and price appreciation. Its almost the same thrill as finding hidden treasure. For the small investor used to only buying a few shar
Stocks, or shares, are a type of security that denote ownership in a corporation. The holder of a stock owns a claim to a percentage of the corporation’s earnings and assets. Penny stocks are stocks that normally trade for under $1, often for under a penny. The most significant difference between penny stocks and other stocks is that penny stocks do not undergo the same level of regulatory oversight. For example, in the United States, penny stock companies do not have to release audited financial records. As a general rule, shareholders have virtually no verifiable information on the inner workings of these companies. This makes it much easier for corporate insiders to act against shareholder interests, and the low per-share price reflects this increased risk of fraud. Another important difference is how penny stocks are traded. Major exchanges such as the New York Stock Exchange and Nasdaq National Market do not list penny stocks; instead, they are relegated to secondary markets such
Penny stocks are basically low-priced stocks that sell for anywhere from $1 to $5, and are generally considered speculative. The term “penny stock” (also called microcap or small cap stock) is most commonly used for the stocks priced at under a dollar a share. You will not find companies such as Wal-Mart or Microsoft in the penny stock section, but remember – they were small companies too once upon a time. The savvy investor must look upon penny stock investing as a challenge to find “the next big thing.
What is a penny stock? How do you define it? Is it prudent to get involved? Some feel that it’s not worthy of investing, others say the contrary. As with any uncertain investment, the best way is to find out information about penny stocks and decide for yourself whether it’s worthy or not. How do we define a Penny Stock? Interestingly, there is no conventional definition for a penny stock. However, a penny stock is one share of a trading commodity in which the price is considered to be lower than $5.00 per share. There are three features, which set them aside, and they are price, markets (where the stock trades) and market capitalization. The price of a penny stock can range from .01 to $5.00 and usually stays in this range for a long period of time. Another point is where the stock is trading. If a stock is being traded outside of such exchanges as New York Stock Exchange (NYSE), NASDAQ, or other major exchanges, then it is still classified as a penny stock. Penny stocks use different
