So what is penny stock investing? As the name suggests a "penny" stock is a listed company whose shares are available for sale at very cheap prices. While a part of a penny stock is not necessarily a penny, it is usually less than $ 5. The share price attracts many investors who think they are buying shares at a discount. However, the truth is that penny stocks are usually high-risk investments.

High Volume Penny Stocks investing is considered a high risk investment is because it is relatively difficult to find appropriate information on these smaller companies. OTC and pink sheet stock companies are not required to provide the level of financial information that is expected of large listed companies in big bags. This lack of financial reporting often forces people to make a guess about the company is or is not capable of doing well. It is also worth mentioning that there have been cases of fraudulent based entities, often abroad, they have created fictitious companies offering shares OTC.

None of this is to suggest that penny stock investing is not worthwhile. Many legitimate companies trade as penny stocks simply because they are small. Just because they are small does not mean you are not growing, profitable and well managed. The point is that because there is less information available about these companies are wise to do everything you can to investigate these companies before investing in them. This will not only protect you from losing your money due to fraud or a bad operating company, but will also help you identify those companies that have a high potential.

The conclusion is that Penny Stocks are cheap for a reason - there is much less information about them and the associated stock trading volumes are much smaller than the shares are traded on the major exchanges. Also, note that given its cheap price, you need to buy a lot of stock to make money on your investment. Moreover, a small company is promising class in which fortunes are made. A penny stock whose price rises 10 cents to a dollar gives you a return on investment. All right!