If you are a beginner in the stock market, you should avoid penny stocks at all costs. A naive trader would find a random penny stock opportunity, and buy tons of it because somebody told that person that he or she will make millions from it. Buying is the easy part, but selling might be close to impossible.
Penny stocks are certainly a good investment option if you are an expert. However, it is a very risky investment option. Before you decide to invest in it, you better read up guides on how to minimize the risk that penny stocks are involved with. The volatility is extremely high.
A lot of beginners make the mistake of getting too greedy. For example, they pray that a stock selling at ten cents per share would somehow skyrocket to $10 in a few days. That is very high of a return on investment, but it is an unusual scenario. You should be happy even if the stock goes up to fifty cents because in the next second, it could plummet down to a penny. Even if you manage to break-even, you might not be able to find anyone to sell to.
It is extremely difficult to get out of penny stocks. If we are talking about Google and Wal-Mart stocks, you can always find people to sell to in a split second. Also, do not put all your money into one type of investment. If you are willing to try out this very risky investment, I would highly recommend that you talk to people who are successfully making a living doing this kind of trading.