What Is Penny Stock? Meaning & Example
Definition
A penny stock is a share of a very small company that trades at a low price, often under $5. They can be highly speculative, thinly traded and prone to manipulation.
Related terms
Small-cap refers to companies with relatively small market capitalizations. They can offer more growth potential but tend to be more volatile.
LiquidityLiquidity describes how easily an asset can be bought or sold quickly without greatly moving its price. Highly liquid markets have many buyers and sellers and tight spreads.
VolatilityVolatility measures how much and how quickly prices move. Higher volatility means bigger swings, which bring both more opportunity and more risk.
What is Penny Stock?
A penny stock is a share of a very small company that trades at a low price, often under $5. They can be highly speculative, thinly traded and prone to manipulation.
Can you give an example of Penny Stock?
A stock trading at $0.40 with low volume can swing 30% in a day on very little news.