Read this first to increase your knowledge, special guide penny stocks for dummies. The fact that you are reading this article makes you not a dummy.
Penny stocks for dummies - basics
A penny stock has many definitions. For those who only trade on the large stock exchanges a penny stock is any stock that is less than $5 per share. The other definitions are generally based on market value. The market value is the number of shares multiplied by the price per share. Penny stocks are usually stocks with a market value less than $200 million (this number can vary.) The most obvious definition is any stock with a price less than $1 per share. The last definition you may see is any stock that is traded OTC (over the counter) or on the pink sheets.
Regardless of your definition the point of penny stocks is your trading lower valued companies that have less information because the company isn’t required to have independently audited information and is never covered by a stock market analyst because virtually no one would read about it or pay for the information.
When choosing to trade penny stocks any broker is required to show you information on the risks of trading penny stocks. Because of the risk not all brokers even offer penny stocks as a choice so make sure you ask.
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