Chapter 1: What Is A Penny Stock?
The first order of business here is to define just what the term; penny stock refers to. The bad news is that there are many mixed definitions out there regarding what this type of stock actually is. Therefore, you need to understand what things are considered to be penny stocks and then how to determine what the stock really is.
For example, a penny stock is a common term used to describe a stock that is inexpensive to purchase per share. This could mean:
A stock that is priced under one dollar per share
A stock that is priced under five dollars per share
A stock that is traded on what is called pink sheets
Any over the counter, or OTC, type of stock
The United States Securities Division says that a penny stock is one that is valued under the value of five dollars and is traded either on pink sheets (over the counter) or on the NASDAQ.
Therefore, it is not well known.
Best Penney Stocks
Usually, people are hands off in this situation meaning that they will tell their broker what they would like them to do and the agent does just that.
What makes a stock safer is the fact that is it less volatile. Whats more is that it needs time to get its feet wet. What is this built in loss? What does that mean?
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