Understanding the World of Penny Stocks

A “penny stock” is an inherently loose investing term, and to every investor there is a different standard as to what the concept entails. There is universal consensus, however, that a penny stock refers to a low-priced publicly-traded equity that is often associated with high risk and increased volatility. The term takes on different meanings between two particular groups – traders on the OTC:BB and investors on major national exchanges. To understand the distinction, it's imperative to first breakdown the differences of the major national exchanges (upper exchanges) and the lesser-regulated counterpart of the OTC:BB & Pink Sheets (lower exchanges).

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