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In the U.S., a penny stock is a common stock that trades for less than $5 a share and are traded over the counter (OTC) through quotation services such as the OTCBB or the Pink Sheets. Although a penny stock is said to be "thinly traded," share volumes traded daily can be in the hundreds of millions for a sub-penny stock. Legitimate information on penny stock companies can be difficult to find and a stock can be easily manipulated. In the U.S. financial markets, the term penny stock commonly refers to any stock trading outside one of the major exchanges (NYSE, NASDAQ, or AMEX), and is often considered pejorative. However, the official SEC definition[1] of a penny stock is a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange (like NYSE or NASDAQ) or an "over the counter" listing service, such as the OTCBB or Pink Sheets. The terms penny stock, microcap stock, small caps, and nano caps are sometimes all used interchangeably, however per the SEC definition, penny stock status is determined by share price, not market capitalization or listing service.
In the UK markets, a penny stock, or penny shares, as they are more commonly called, generally refer to a stock and shares in small cap companies, defined as being companies with a market capitalization of less than £100 million and/or a share price of less than £1 with a bid/offer spread greater than 10%... In the UK Penny Shares are covered by a standard regulatory risk warning issued by the Financial Services Authority(FSA)
In France, a penny stock generally refers to a risky stock with a price of less than 1 euro.
Penny stocks generally have market caps under $500M, trade under $5.00 per share and are considered speculative, particularly those that trade on low volumes over the counter. High-Risk Investments
You need to be equipped with the right knowledge before you even attempt to buy a penny stock. Unfortunately, too many investors do not spend enough time and money on educating themselves with the right skills first, and end up losing most of their money on their first few losing trades.
With the Doubling Stocks newsletter, you can have experts analyze all the cheap stock companies and tell you which the strong fundamental companies to invest in are. // created at animoto.com
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