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Penny Stock In U.S penny stock relates to a stock trading which is conducted outside some of the major exchanges such as NASDAQ, NYSE and AMEX. Officially or as per Securities & Exchange Commission penny stock are low priced securities of a small company.
You can use microcap, penny stock and nanocap interchangeably. As per the definition of SEC penny stock is decided by the prices of the share and not on the basis of listing service or market capitalization.
In UK, penny stock refer to shares in small companies which have market capitalization less than £100 million or the share prices are less than value of £1. The penny stocks have market capitalization which is less than under $500M but they are quite speculative. Penny stocks are traded infrequently and this should be kept in mind and beginners should avoid them.
Penny stock is less liquid and it does not trade in quantity. Penny stock is listed quite limitedly. Investment in penny stock can be quite dicey and one should be quite careful about it. Penny stocks hold the promise of converting your small capital into big fortunes which are selling for less than $5 a share.
Penny stock tends to attract both investors and traders since very less capital is required for making gains. You cannot consider penny stock companies to be inferior to other stocks traded on major exchanges. You can visit penny stock sites and bulletin boards for getting hold of emerging companies. Also avoid penny stock picking sites with wrong projections or false advertising.
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