What Are Penny Stocks? An Explanation

Trading and investment has changed a lot overtime, and we are currently experiencing the rise of online currency, also known as cryptocurrency, which involves transactions and trade done through online currency known as bitcoins, and bitcoins have become very common. A lot of people have even managed to become millionaires through online trading and investing. Now, another form of investment that has been on the rise are penny stocks. Now, if you are still skeptical, you can check out Forbes.com for their articles on millionaires that have achieved their millionaire status by exchanging penny stocks.

Now, if you are unfamiliar with the term penny stocks, then simply put, penny stocks basically involves any trade and investment done under $5, or in pennies. So, it is a ridiculously small amount of money that you put in and invest in businesses. Of course not all businesses allow penny stocks to be their medium of trade, rather penny stocks are usually restricted to new, smaller companies that have not yet set a track record as a known or reputable business yet, and these businesses and companies also happen to have a small market capitalization at the time.

It is because penny stocks are cheap that people are attracted to them since they are not putting in a lot of money when they are investing in the company, and with relatively new companies, you can see a up to a 100% run or increase in the span of a single day. So, you can end up getting really large returns in a very short amount of time, so you can rake in a lot of money with multiple penny stocks. However, there are also risks since this market happens to be really volatile, so you can end up losing all of your invested money.