#1. “Penny stocks” are defined by the SEC as any stock that sells for less than $5 per share.

#2. Penny stocks are often either new, up and coming businesses, or companies have dropped in price so low that they have been delisted from a major exchange.

#3. Penny stocks are generally riskier than stocks listed on the major exchanges, however they have the potential to move at lot more as well causing a higher risk and higher potential reward.

#4. Penny stocks are not as liquid as stocks on the major exchanges, meaning much fewer shares are traded every day, so it may be harder to get out of your positions at the price you want.

#5. Companies behind the penny stocks are often harder to get information about than companies on major exchanges.

#6. As with all trading, don’t use money you cannot afford to lose. You could win big but you could also lose your entire investment.

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