December 16, 2020 By Swapnil Suryawanshi

Penny stocks, also referred to as micro-cap stocks, nano-cap stocks, small cap stocks, or OTC stocks, are common shares of small public companies that trade for less than one dollar per share.

The U.S. Securities and Exchange Commission (SEC) uses the term “penny stock” to refer to a security, a financial instrument which represents a given financial value, issued by small public companies that trade at less than $5 per share. Penny stocks are priced over-the-counter, rather than on the trading floor, hence the use of the name “OTC stocks.”  The term “penny stock” refers to shares that, prior to the SEC’s reclassification, traded for “pennies on the dollar.”

Top-performing penny stocks in August 2020 - Dalal Street Investment Journal

Concerns for investors :

There are inherent concerns that individuals should be aware of when investing in penny stocks, namely the lack of information that often exists surrounding the companies offering said stocks.

Notable cases :

The Mafia had infiltrated Wall Street by the 1970s. In the 1980s Lorenzo Formato conducted penny-stock manipulations. Formato testified in Congressional hearings that during the years he promoted and sold penny stocks, he was involved in organized crime.

Regulation :

In the United States, regulators have defined a penny stock as a security that meets a number of specific standards. The criteria include price, market capitalization, and minimum shareholder equity.

Penny Stocks to Avoid - GreekShares

Can you make money with penny stocks :

Do penny stocks really make money?

Yes, but they can also lose a lot of moneyPenny stocks are a risky investment, but there are some ways to lower the risk and put yourself in a position for moneymaking penny stock trading.

Has anyone got rich from penny stocks :

Tim Grittani (left) began day trading penny stocks with $1,500 three years ago. By following the lessons of penny stock guru Tim Sykes (right), Grittani has raked in over $1 million in profits.

Is it difficult to sell penny stocks :

According to the Securities and Exchange Commission (SEC), “Penny stocks may trade infrequently, which means that it may be difficult to sell penny stock shares once you own them. Because it may be difficult to find quotations for certain penny stocks, they may be impossible to accurately price.”

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