What are pennies stocks?

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What are pennies stocks?
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Pennies stocks are traded outside mainstream
market exchanges at low prices because they have
very low market capitalization. Penny stocks are
highly speculative and risky because they lack
liquidity, have limited disclosure and following
and have wide bid-ask spreads. Penny stocks trade
via pink sheets or the OTC Bulletin Board (OTCBB).
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What is the value of a penny stock?
The term penny stock evolved from the market.
Historically, penny stocks traded for a dollar or
less per share. Today, the SEC has modified this
definition to include all shares that trade below
5.
What is the difference between a penny stock and
a regular stock?
Penny stocks do not trade on major market
exchanges like the New York Stock Exchange (NYSE)
or NASDAQ. That said, there are a few large
companies listed at 5 per share who trade on
main exchanges. Curtis Inc. (CRIS) is an example
of a penny stock listed on NASDAQ. It is a
biotechnology company. The typical penny stock
company is small with speculative, highly
illiquid shares. The company is subject to fewer
regulatory and filing standards and limited
listing obligations.
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Who can invest in penny stocks?
Penny stocks are open to everyone. They are more
appropriate for investors who tolerate risk very
well.
Penny stocks are highly volatile and have high
levels of risk, but they result in large rewards.
There is a heightened amount of risk related to
penny stocks. All investors can protect
themselves to a degree by implementing a
stop-loss order before entering a trade. This
will help you exit the market if your stock
starts to dip.
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How much can you make with penny stocks?
Penny stocks are capable of generating large
returns. For example, many investors can turn
100 into 5,000 in a week but these gains do
not occur all the time and usually take months if
not years to occur. Unlike with regular stocks,
if you stay too long with a particular penny
stock, you are likely to lose your investment.
Therefore, trade safely!
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