What Are Penny Stocks?

 

In this podcast, I want to discuss the basics for some of you who may be new to In Penny Stock. 

So why are they called Penny Stocks? 

The SEC established the concept of penny stocks almost a few decades ago. 

• They refer to any security or share of stock that is issued by very small companies and that trade at less than $5 a share. 

They are quoted over the counter and are therefore commonly referred to as OTC Stocks.

 

Why do Penny Stocks have an advantage?

First of all, they don't have the same level of regulation that bigger stocks have. 

So, why would I want to trade in those volatile stocks?

• This volatility is actually what gives average traders the ability and the advantage to successfully trade in this industry. 

Wall Street analysts don't trade in this sector, so you won't be competing with the big players in the stock market. 

The low market cap and the low market price of the stock expose it to increased volatility, which in turn allow for larger gains. 

 

Pump and Dump Schemes

Because there is less regulation on Penny Stocks, there is a greater chance for them to be manipulated by false news and pump and dump schemes. 

One of the main things we teach at In Penny Stock is how to navigate these pump and dump schemes so that you can always stay ahead of them and profit off of the hype. 

 

If you're looking to learn more about what you need to trade check out our 7-day free trial and gain access to hundreds of hours of exclusive materials.