Penny Stock Basics - High Risk, High Reward

Today's guest blogger is PennyStocksVIP. They have kindly offered to share sections of their members' only PDF with our blog visitors today. Although risky, penny stocks have a certain charm. These excerpts will share simple definitions and information about these high risk, high reward stocks. Learn more about PennyStocksVIP and their complimentary alerts.

What are Penny Stocks?

First, let us define what a penny stock is. While there is no real definition that is commonly agreed upon, how investors behave with certain stocks give us clues. Most stocks trading at below $5.00 are treated as Penny Stocks. This, even though being the mist defining of the criteria, is not all there is to look at. There are three major guidelines to follow to see if you are looking at a Penny Stock.

1) Price per share: As mentioned above, the trading price range helps determine if a stock is a penny stock. The lower it is, the closer it is to being a Penny stock, although there is no exact point when this happens.

2) Markets: Depending on where a stock is traded, such as Over The Counter Bulletin Board (OTC-BB), Canadian Venture Exchange (CDNX) or Pink Sheets, it may categorize a company as a Penny Stock. As Penny Stocks trade on different market exchanges, one will need to know where their stock of interest is trading before setting up an order. Continue reading "Penny Stock Basics - High Risk, High Reward"