What is a penny stock?


‘Penny Stocks’ means those stocks which are valued less than a dollar. These stocks are usually less liquid, highly speculative,and less reliable. So, not very much recomended for investment.

This is what investopedia says-

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Penny stocks are usually referred to as Speculative Stocks.Penny stocks are stocks which are priced so low that you can buy large quantities of them with small investments. Penny stocks do not pay dividends and usually trade much below the par value. These stocks may get delisted , so it is best to stay away from penny stocks.

Penny stocks are a type of stocks generally traded at lower prices. They have less market capitalisation, they are most illiquid, and are usually listed on a smaller exchange. These stocks are very unfounded in nature and are known as highly risky because of lack of liquidity, a smaller number of traders. It needs lots of market knowledge and market expertise to gain a good return by trading penny stocks. Many traders take suggestions from financial market experts with their best stock tips, commodity trading tips or much more in order to save investment from huge losses.