Today, a " penny stock " is a small cap stock that is trading below $5. Even if you can find stocks trading below $5 on the NYSE or Nasdaq, as these markets require strict listing requirements, they do not offer the advantages of a " true " penny stock.
You buy penny stocks as you would with any power stock, through your stockbroker or any trading platform. More often, penny stocks trade on Pink Sheets or OTCBB.
What makes them interesting is their volatility : some of those stocks have gone from $0.5 to $7 in a few days.
Penny stocks are risky because they are not registered with the SEC (Pink Sheets ones) and when they are (OTCBB ones), the reports stay at a minimum.
Image : © KMR Photography, CC BY 2.0.
