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.
OTC markets can be part of the NASDAQ which is the National Association of Securities Dealers Automated Quotation.
Penny Stock Symbols
You see, if they are not the best of people, as soon as your investing into the penny stock happens, they sell off their stocks.
If he or she does not want to meet your needs, for example, they do not tolerate your level of risk then they are not the right broker for you. Get the prospectus. The fact is that having the right combination of safety and risk is the biggest factor in investing in penny stocks.
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