Penny stocks are stocks that are generally below the price of $5. They are high risky stocks and are so much avoided by financial advisers due to its high volatility but it has a high reward potential. Some high risky-loving stock speculators likes to play with this type of stock as they say it can generate over 1000% ROI within a day. The truth remains that the penny stocks are high risky stocks with tendency to wipe out a trader's stock account in a glimpse if traded with no tight precautions.
The big companies we see today started from a scratch. Hundreds of these little companies are created but only few survives to be among the big companies like the MICROSOFT we hear of today. The ability of a penny stock trader to find those stocks among the trash that will be among the big tomorrow is where his success rests on. The stock of these small companies which are not yet discovered is a penny stock. There are some penny stocks that where sold for below 10 cents but now worth over $10 in the stock market today.
For investors who want to take their slice on penny stocks, you can do this by getting leads from penny stock professionals or doing your own research to enable you pluck the apple in penny stock trading. To learn how to do your own research for free, grab our e-book by Nnadi Jane PROFIT BOOSTING GUIDE ON STOCKS for practical guide on how to research for your stocks.
Penny stocks are traded in pink sheets and over-the-counter bulletin board OTCBB.
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