Introduction to Penny Stocks
Trading good penny stocks can be indeed very profitable. A stock can easily go up by 50 times in a day: so your $1000 investment would turn out to be $50 000 only in a day! On the other hand, it’s also easy to loose everything you have.
So you might wonder what is a penny stock? Well, there is no official definition for it. Some say a penny stock is traded under two dollars, while others say it’s a stock that’s traded under five dollars. I personally prefer to call a penny stock, a share that’s currently being traded under a dollar.
A sub-penny stock is any share traded under one penny. Sub-sub penny stock is any stock traded in the range of one hundredth of one penny.
There are various stock markets where penny stocks can be traded. Pink sheets markets, NASDAQ small Cap Market and American Stock Exchange are the markets for penny stocks in the United States. The NASDAQ and AMEX are the safest since they allow investor to have full access to company’s financial data. On the other hand, Pink sheets markets are the most risky with no financial reporting requirements.