the vast majority of them are cheap for very good reasons
however, it is possible to realize very large profits with them very quickly. Suppose you buy a million shares at 1 penny apiece, for 10,000 bucks. It could easily go up a penny in 1 day or less, and just like that, if you sell, you make a 100% profit.
of course you can lose all your money just as fast
It depends what you are classifying as penny stocks. As I see it, at least in USA, penny shares are OTC (Pink Sheets, BB) and as such are NOT LISTED on a recognised stock exchange. So they are private companies and all this has a great (negative) effect on liquidity and reporting requirements. As such most (99%) are just rubbish.
You will find very little financials on their websites, no proper analyst cover, and none of the announcements/statements can be trusted or , at best, report very little substance.
They are also susceptable to price manipulation and in wrost cases, pump & dump operations.
Of course this rubbish is not confined to US as you have exchanges in Frankfurt etc. that incorporate very junior markets that don't have the full protection of the main markets.
Best to keep well away from penny shares.
According to me penny stocks are the actual stocks , but their price is lower compare to other stocks so its called penny stocks
A penny stock is a stock with a share price five dollars or less so being someone that has flipped a lot of penny stocks there is a massive difference between a one to five dollar a stock and a one cent to 50 cent stocks,
Lots of people even trade sub penny stocks which are below a cent a share. Also keep in mind that market cap of a company is important as well in other words you could have a four dollar stock with 250 million shares out which makes this penny stock a one billion dollar company.
So..
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Penny stocks are frequently manipulated with rumors to generate a frenzy of buying and then selling. If stock is really one cent per share, you could buy a thousand dollars worth which is 100,000 shares. This gets noticed and the price rises. Do it several more times and rumors begin to fly. (They finally discovered gold in that hole in the ground). When the stock jumps to ten cents, sell all your stock. They are gambling, not investing.
Penny stocks are much riskier than "actual" stocks.
I am new to trading and want to get started with something not as expensive to gain knowledge about stocks. Just to clarify, are penny stocks different than actual stocks? Meaning, are there different trading websites etc. Also, what is the best trading website?
