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Penny stocks have several different meanings. Some believe penny stocks to be any stocks that are priced less than . This is in fact the official labeling of them by the SEC.

Some traders class them as stocks that are priced less than or . Some other investors refer to penny stocks as any stock that is not listed on a major stock exchange like the NYSE or AMEX.

Penny stocks are perhaps the highest risk type of stock to buy and sell. They often have super high levels of volatility. Fortunes can quick be made or lost. More often they are lost.

One consideration when trading these stocks is to find a stable penny stock trading broker. Many brokers do not like penny stock traders as they typically do not make a lot of money on them. As a result of this some stock brokers place additional fees for all trades that purchase stocks under a certain price.

After doing some research, I discovered that one popular broker charges an extra cent per share on all trades on stocks priced less than . Another brokerage charges two cents. This might not sound like much, but do not forget as penny stocks are low priced, you may be looking to purchase a lot of them.

Some penny stocks can fluctuate by double digit percentages in the space of a day quite regularly. There are also a significant number of additional risk factors to consider when you trade penny stocks.

Another thought is that some penny stocks are not traded to much, this can equate to liquidity problems. If there are not enough buyers of a particular stock when you want to sell it, it may not be possible to sell at the exact time that you want. Due to the high volatility the price of the stock could change considerably by the time a buyer can be found.

I often think penny stocks are not too far away from gambling down at the casino. In some cases the casino offers you better odds.

 

 

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