US Penny shares are common stock, trading at less than $ 5 per share. These stocks are used at the counter (OTC) to quote services – OTC Bulletin Board (OTCBB) or Pink Board. It is said that Penny Stocks trading volume is small, but look at the stock trading volume, we can see that for a penny stock, the number is hundreds of millions. For companies with a penny stock, it's hard to find legal information.
In the US financial markets, stocks are those traded outside the major exchanges, including the New York Stock Exchange, NASDAQ, or the American Stock Exchange. Usually these stocks are rejected and considered to be derogatory. The official jargon of a penny stock is defined as "a very small company that stocks low-priced speculative securities" – whether or not market capital exists if it is traded on a securitized exchange such as the NYSE or NASDAQ G or other stocks in the OTC such as OTCBB / Pink Sheets
are also known as other names, such as miniature stocks / mini caps / nano caps and the like. These names are used interchangeably. It should be understood that, according to the SEC definition, the status of a penny stock is determined by the stock price, rather than by the marketing capitalization or stock listing services decision. A penny stock is usually listed for less than $ 5. Traditionally, a stock traded at $ 41 or less per share is called a dollar stock, but according to the SEC definition, it is $ 5
Penny stock is called Penny stock in the UK market. They refer to small company stocks and stocks that are defined as companies with a market value of less than £ 100m and / or less than 1 pound and a bid / offer spread of more than 10%. FSA – UK Financial Services Authority – Issue a risk warning as part of a penny standard.
There are many investors in the market that are new, or novices are attracted to a penny stock because they are cheap and they are considered to have the potential for rapid growth in the future. When the stock is vigorously promoted, this feeling will occur. But if investors are not careful, they can have serious losses because it is a fact that many pennies have lost all their value over the long term. A penny stock has low liquidity, no formal financial reporting, and a fraudulent business. Because of their lack of liquidity, these stocks are easy to manipulate. Similarly, a sudden change in demand or supply can lead to stock price volatility. The OTCBB offer is only a minimum. This is why the SEC warns that these stocks are in the high-risk category and that new investors are aware of all the risks involved