Lesson 5 – Penny stocks

Penny stocks trading

Penny stocks, also known as cent stocks in some countries, are common shares of small public companies that trade at low prices per share. In the United States, the SEC defines a penny stock as a security that trades below $5 per share, is not listed on a national exchange, and fails to meet other specific criteria.In the United Kingdom, stocks priced under £1 are called penny shares. In the case of many penny stocks, low market price inevitably leads to low market capitalization. Such stocks can be highly volatile and subject to manipulation by stock promoters and pump and dump schemes. Penny stock trading present a high risk for investors, who are often lured by the hope of large and quick profits.

Penny stocks in the USA are often traded over-the-counter on the OTC Bulletin Board, or Pink Sheets. In the United States, the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) have specific rules to define and regulate penny stock trading .

Of course, Buying cheap stocks has a very high earning potential. but it also has its risks.
That’s why it’s so important to do it right, and with a solid suitable strategy! (For more on penny stocks trading click here)

Next: Lesson 6 – Options Trading