What is Penny Stocks?
Stocks of small companies traded at $5 or lower are called Penny Stocks in the U.S. market.
The penny stocks are typically traded over OTC (Over-The-Counter) markets and not highly regulated stock exchanges like NASDAQ or New York Stock Exchange, making them prone to manipulation. Penny Stocks have high-return potential but are equally high-risk. While many penny stocks have provided shareholders with hefty returns over the years, many have also failed.
Invest smartly by learning more about Penny Stocks with Money & Advice.
- David Adebomi
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- 05:00
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Investing in the stock market offers a multitude of opportunities to grow one’s wealth, among
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FAQ
Penny Stock differs from regular stocks mainly in its low pricing and market capitalization.
Also, regular stocks with higher market capitalization are traded in reputed stock exchanges like NYSE and NASDAQ.
In contrast, Penny Stocks are mostly traded in over-the-counter (OTC) markets, including OTC Bulletin Board and privately-owned OTC Markets Group. It’s important to note that some penny stocks trade on the NYSE.
Yes, like any other stock investments, Penny stock investments are risky as well.
However, investment in Penny Stocks is relatively riskier due to its exposure to stock price manipulation and fraud.
Moreover, Penny Stocks usually witness high price fluctuations and are often difficult to buy or sell, causing a lack of liquidity for investors.
You can invest in Penny Stocks by opening a brokerage account with a firm that offers Penny Stock trading. As not all brokerage firms offer penny stock trading, it is always recommended to check beforehand.
Once you’ve opened the brokerage account, you can place orders and buy or sell penny stocks like regular stocks.
You can find good penny stocks by reviewing the company’s annual financial statements, news articles, financial reports, market predictions, experts’ analyses, and monitoring its performance.
You can learn about some of the best penny stocks on Money & Advice to make informed financial and investment decisions.
The Securities and Exchange Commission of the United States monitors and regulates the Penny Stocks trading in the United States.
It helps protect the investors through rules and regulations to prevent fraud and stock manipulation and promote transparency.
Even with SEC regulations, Penny Stock trading is known to be comparatively riskier than regular stock trading. Doing due diligence before actively engaging in penny stock trading is highly recommended.
