Penny stocks are those companies with shares trading less than $5 a share and trading on the otc exchange. Sometimes instead of the word penny stock, microcap, small cap or nanocap is used. Most penny stocks have a market cap of less the $500M and are speculative stocks. Penny stocks may trade infrequently which means once you buy penny stocks it may be hard to sell the penny stock. Penny stocks may not report and could be hard to accurately find the real market price. When investing in penny stocks investors could lose their whole investment. Also there are many risks with penny stocks such as liquidly which was mentioned already and fraud. That is why penny stocks are considered a high risk investment. With the lack of liquidity in penny stocks once buying occurs volatility is great which causes manipulation with penny stocks. If you have any questions our penny stock message board can help you find the information you need to assist you when trading penny stocks.
Article Written by Dave of Stockhideout.com Best Penny Stocks