What are penny stocks and how do they work

What are penny stocks and how do they work

You often hear about these hot penny stocks, that people make a lot of money from and you wonder what are these penny stocks? How can I buy and sell penny stocks?

Penny stocks explained

the securities and exchange commissions defines a penny stock as a security that trades below $5 per share.is not listed on a national exchange, and fails to meet other specific criteria.These stocks are very volatile and while present great opportunities for quick profits for investors they also pose big risks. One of the biggest risks is falling into a pump and dump scam where manipulators first purchase large quantities of stock, then artificially inflate the share price through false and misleading positive statements, after they sell all their stocks with great profits and the people who bought the stocks are usually left with the stocks at a lose and not being able to sale them.

Penny stocks are a risky investment and you should only invest a sum of money that you can afford  to lose if you lose.

There are some great free resources there to research penny stocks like Bloomberg and yahoo finance. You can also get more information about penny stocks here

Best of luck