Companies whose stock has dropped to pennies are usually not earning money, owe a large debt and are on the verge of bankruptcy. Most actually become worthless.

For these stocks, a small change in price is actually a large percentage move and this volatility is what gamblers look for.

Penny stocks are frequently used in a scam called, "Pump and dump". This is a fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements or other measures.

Once the operators of the scheme "dump" their overvalued shares, the price falls and investors lose their money.

You are better off buying a single share of a money making company for $100 than a hundred shares of a losing company for $1 each.

?To truly invest; choose a company that has steady earnings each year instead of losses. If your company has very little long term debt, it will likely not get into financial trouble.

Buy quality stocks and hold on to them. When you hold these over a period of time, the share prices will go up for a real reason - the companies are earning money every year and becoming more valuable. This is not gambling; you are owner of a money making business.

If you save a portion of your income each payday and as it accumulates invest in stocks, over the course of several years you can grow very wealthy indeed. It is like hiring someone to get a job and earn money for you, and then using that money to hire more workers. Your money grows exponentially.

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Hey so i know absolutely nothing about the stock market. i just turned 18 and opened a scottrade account. From what i've heard i think i'd like to trade penny stocks. Can someone explain how everything works? how to get started? how to determine what are good stocks to invest in? Just basically break everything down as simple as possible! Thanks

-i know absolutely nothing please help and make it simple! 10 points!