[Read the SEC's
Definition for Penny Stock]
Penny stocks are typically lightly traded, small-cap stocks, with little information available about them when compared to non-penny-stocks.
Because of these factors, they usually reflect highly risky, volatile investments.
Some investors attracted to higher risks find penny stocks attractive, since a small nominal move to one's advantage in a penny stock may result in relatively large returns, (a $0.50 move on a stock trading at $0.05 is a big move).
All penny stocks are offered Over the Counter (such as the OTC Bulletin Board) or on the Pink Sheets.
The usage of the term may differ depending on country, regulator or trader.
