Penny stocks are stocks that trade on the OTC and typically are trading less that a $1 a share. These microcap stocks often times lack the liquidity of stocks that trade are larger index like the Nasdaq or NYSE.
Penny Stocks are often times lack the regulation and oversight that most publicly traded companies have. Often times these stocks are manipulated by stock promoters or insiders trying to sell shares. We consider penny stocks very high risk. Now that you have been warned their are people that make a lot of money by trading penny stocks.
Penny Stocks can be traded using online brokers like E*TRADE, TD Ameritrade, And Robin Hood.
There are different classes of penny stocks:
OTCQB: These are stocks that give more transparency and filing information that OTCPink and Grey but lack the minimum requirements to be listed on a major exchange.
OTCPink: These stocks lack a lot of the filing information. Generally have unaudited financial reports and Usually have toxic funding
Grey Sheets: These stocks have failed to file with the SEC and do not have market makers.
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