Penny stocks are stocks that are trading below $5.00 a share. They are highly volatile.
Why It's Important
Investor beware! Penny stocks have the potential to make investors a lot of money they also expose investors to a lot of risk. They key to penny stocks is volume. Making $0.10 on a single stock does not seem like a lot but when you multiply it by hundreds or even thousands, it adds up! On the other side, losing $0.10 on a single stock does not seem like much until you multiply by hundreds or thousands. With that said, be aware of what you are getting into when dabbling in these types of companies and trades. Happy trading!