Penny Stock Basics
Most people think of penny stocks as micro caps that sell under 1 dollar, while the SEC's unofficial definition of a penny stock is a stock which sells under 5 dollars. While there is no official cut off on a penny stock price, companies are regarded as penny stock when they 1, have less than 200 million dollars in market value 2, are traded on Pink Sheets or Over The Counter Boards instead of legitimate exchanges like NYSE and NASDAQ.
Penny Stock Dangers
When investing in penny stocks there are too main dangers to keep in mind. The first being the financial risks connected with such a low liquidity, low market capital stocks; and the second, the security risks which accompany all OTC transactions. The most fundamental rule of penny stocks for dummies is: Do not get scammed. Sure, it sounds a lot easier than it is, but if you are very careful and selective you can avoid being a victim of another pump and dump, price manipulation scheme.
Penny Stock Aid
If you are too scarred and too inexperienced to get into penny stocks on your own, don't despair. There are many great newsletters, advisories and services to guide you through penny stocks.
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