Penny stocks in general have a very negative stigma connected to them. Despite the risk involved with these stocks investors continue to pour money into them hoping to find the next Microsoft or Google.

Most professionals would tell you that penny stocks are anything that trades on the OTC BB or Pink sheet market. The companies on these exchanges are loosely regulated and are usually news driven. I find that it’s the small new investor that is usually caught up with these stocks. With less money the new investor is pulled in with the dreams of making it big and finding the quick buck.

Penny stocks can move up fast and drop even faster. I only recommend penny stocks to the savvy investor with the right tools. I don’t recommending going long term in anything that trades on these exchanges. Trade them don’t invest in them. Many of stocks are extremely illiquid and can selling them can be extremely difficult, that is why you should only trade high volume stocks.