I read a bit about this on another forum and asked about it but have not gotten a really understandable answer. Can someone tell me what exactly are penny stocks and are they a good idea to get into if you have very little (nearly none) money to invest if you are just looking for a way to make a small amount of money a bit bigger?

I don't have a lot of money to invest, or lose for that matter and I know nothing about the stock market or any type of investment really for that matter.

So far as I understand it, Penny Stocks are effectively very cheap stocks - literally, often only costing pennies, at under $1.

Problem is, these stocks tend to be very high risk - issued by high risk and small businesses, where long-term value may not be great.

However, with all risks, it seems the bigger the risk the bigger the rewards - if you get it right.

Another point about Penny Stocks is that they tend not to be listed on exchanges, but can simply be traded "over the counter" between brokers and even customers directly.

Hope that helps.

It does thank you. I have been trying to look up some information on my own but the most I'm getting is confused so I will probably check out some books from the library and read them when the kids start back their lessons. Many hours with NO electronics of any sort.

I think it's fair to say that it's probably a good idea to ensure you do plenty of research, not simply on penny stocks, but also the type of companies involved - before diving in with them.

Hi LilOne,

Penny stock is nothing but stock which sells for less than one dollar per share (or in some cases, less than five dollars per share).And also they are attractive to private investors who do not have enough capital to purchase more expensive shares.

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Penny stock!
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Highly volatile, penny stocks see the largest percentage of both increase and decrease. If you have little money, and less you can afford to lose, this is probably not the place to begin. You may consider government bonds or blue chip stocks or even certain funds as a way to invest with lower risk until you have some equity you can afford to speculate with.

Many people which are attracted to penny stocks try to get huge returns very quick...unfortunately they forget the risks involbed with it and in most cases end up loosing the majority if not all of their investment.

Many penny stocks have no revenues and their balance sheets are less then acceptable.

I personally don't recommend them especially if you're new to the investment arena.

There is money that can be made of course but you should have a level of experience before entering the penny stock market.

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It is not smart to play it safe but it is safe to play it smart.

I think there is absolutely no sense in doing any kind of F/A in penny stocks.

Think of the arena you are playing in....99% scams imho, and full of manipulation...expert experienced traders will eat most newbies for luch. Pennies are strictly to be traded and the amount I do is entirely T/A and momo based. If you like fast action and have the appetite for high risk/reward then learn the options market imo....

Options as a Strategic Investment by Lawrence MacMillan is a fantastic book.

Options for the Beginner and Beyond is another....I believe its by Olmstead.

Good Luck.

I agree, it makes no sense to apply a financial analysis on penny stocks and that there is a lot of SCAM in that particluar market. There are a lot of Pump-and-Dump tactics scammers use to lure potential investors.

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It is not smart to play it safe but it is safe to play it smart.

I have played around with penny stocks a bit, and it is definitely worth looking into at the very least.

While there are other things I would rather invest in, I still understand how penny stocks can be useful.

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