- Penny stocks are stocks that trade for less than $5 per share.
- They are typically issued by small, young companies with limited financial resources and operating histories.
- Penny stocks are highly volatile and risky. They can experience large price swings in a short period of time, and many penny stocks ultimately go to zero.
- Penny stocks are often illiquid, meaning there may be few buyers and sellers, making it difficult to buy or sell shares quickly.
Additional tips for researching penny stocks:
- Read the company's financial statements. This will give you a better understanding of the company's financial health.
- Research the company's management team. Make sure the team has experience in the industry and a track record of success.
- Be wary of stocks that are heavily promoted online. These stocks are often scams.
- Never invest more than you can afford to lose.