Everything You Need To Know About Investing In Penny Stocks
A penny stock, also referred to as a microcap stock, is an equity that trades at less than five dollars per share. The term “penny stock” is used to describe securities that are traded primarily on the over-the-counter (OTC) market.
Many people mistakenly think that penny stocks are stocks that cost only a dollar or two per share, but this isn’t true. Penny stocks are shares of companies that have small market capitalization and often trade for less than $5 per share.
Before you invest in penny stocks, make sure you understand the risks involved with this type of investment. To help you decide if investing in penny stocks is right for you, read these tips about penny stock investing:
Don’t buy on tips or rumors – This is one of the most important rules when it comes to buying penny stocks. You will find many people who claim they know which penny stock will be the next big thing.