The Penny Stock Lottery
Penny stocks usually trade outside of the major market. The price for penny stocks are relatively low and they have a small market capitalization.
Based on its high risk and being seen as speculative, it's a lottery. The investor is gambling with the odds of buying stocks below $5 per share and seeing a better return.
Those who invest in penny stocks should have realistic expectations because these are often growing companies with limited cash and resources. Nasdaq is a great to use for protection because exchanges are extremely regulated.
What makes penny stocks so risky is the lack of history of the company and information available to the public.
That said, be very careful investing in penny stocks because you might lose more than what you offered.
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