What Is a Penny Stock?

What are penny stocks?

What are penny stock

A penny stock is usually the stock of a small company that trades for less than $5 per share. Although some money stocks are traded on major exchanges such as the New York Stock Exchange (NYSE), most are traded through a counter (OTC) via an electronic OTC bulletin board (OTCBB) or privately owned. Is through the OTC Markets Group. There is no commercial destination for OTC transactions. Quotations are also done electronically.

4 Tiers of Penny Stocks

What are penny stock

  • Tier 1 Penny Stocks:  penny stock trading These stocks are listed on major stock exchanges such as the Nasdaq and the New York Stock Exchange. They usually cost less than $ 5 per share, although they can be a little higher. They have a higher standard than OTC money stocks because they have to provide financial information for the exchange, which means they are less open to manipulation.
  • Tier 2 Penny Stocks: hot penny stocks, These are traditional money stocks, usually between one cent and 99 cents.
  • Tier 3 Penny Stocks: These are sub-money stocks, which trade below one penny per share. After all, these companies are not so strong that their share price is a penny per share. You will never find these stocks on the New York Stock Exchange or Nasdaq.
  • Tier 4 Penny Stocks: These are triple zero stocks, which means they are priced between 0.0001 and 0.0009 cents per share. Often “stock penny stock” warnings are on these stocks and mainly benefit those who bought the stock first.

Minimize Risk with trading penny stocks Trading Do Money Stocks Really Make Money? Yes, but they can also lose a lot of money. Money stocks are a risky investment, but there are ways to reduce that risk and put yourself in a position to make money, how to trade penny stocks.

  • Choose stocks from companies in the TC OTCQX market, as there are strict financial standards for companies listed in this category. These companies must comply with US securities laws and meet higher standards of operation than OTCQB and OTC Punk Markets.
  • Avoid pink and pink sheet stocks, which are prone to manipulation and fraud. Not only are well-known companies likely to give you a return, but they are also a low-risk investment.
  • Pump Avoid pump and dump scammers. Many OTC stocks will be promoted as the next major breakout, but the fact is that these big companies, which provide a close guarantee of success, start with a high-priced IPO, not money in the stock market. Are.
  • Avoid low liquidity money stocks. investing in penny stocks Most of the money in a day is about a thousand shares in stock volume, but pie stock companies with breaking news can have millions of shares in a day. How can money stocks make money for you? This is the time when you have the potential to invest, and in the world of money stocks, something big happens every day.
  • Don’t overtrade it. investing in penny stocks Once you find your desired stock, you think about where other traders will enter, buy when the money will sell the stock, make instant profits and stop the small profits that increase over time. Adjust. You may be lucky and have great success at this point, but most of your money will come from these small businesses.
  • Don’t focus on trading or investing. Trade money stocks every day, and you will find that you are making money by buying and selling money stocks, instead of investing in the next big loss. In weeks, months, and years, you will know that you are making cash.
  • * Understanding the business. It is important to understand the business you are investing in before buying stocks in the business. Background research for big events and news and market monitoring is a common practice for today’s traders. You should apply the same strategy to trading money stocks.
  • Risk Take only the risk you can lose. good penny stocks to buy,  There is no guarantee of investment, especially when you are trading money stocks. You should only trade with the money you can afford to lose if a bad situation arises.


·        Offer a place for small companies to access public funds.

·        In some cases, pie stocks can provide a way to access a large market list.

·        With lower prices, money allows for a significant reversal in the definition of stock shares.


·        There is a lack of liquid market with some buyers in the money stock, maybe even after that their price has gone up.

·        Limited information is available on the company’s financial records.

·        The main company in the pie stock is more likely to be fraudulent and bankrupt.

Real-World Example of Penny Stock Fraud

What are penny stock

According to the Federal Bureau of Investigation (FBI), Zarq D. Mason, a California resident, created about a dozen half-shell companies and offered them to investors as money stocks between 2008 and 2013. De Mason told investors that companies are engaged in a variety of businesses, such as gold mining and the diamond trade, when in fact, they did nothing. He sold the stock in “boiler rooms” offices where brokers use high-pressure tactics to force people to buy stocks by promising huge profits. In 2015, de Mason and seven others were convicted of securities fraud and sentenced in federal prison.

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