Most investors if you ask them will agree that a stock selling below $5 a share is a penny stock. A fuller definition of what a penny stock is, would involve the stock’s currently outstanding stock shares which is also known as market capitalization. Many people look at a stock’s market capitalization than its share value to determine if it is a penny stock.
To figure out what the market cap is of a stock, you would multiply the share cost by the quantity of shares that are currently outstanding. Penny stocks are not traded on the major exchanges, so you will find these stocks trading in the over the counter (OTC) marketplace.
In general, if investors want to give themselves the best chance of making money with penny stock investing, then it is important that you use a system that can tell you exactly what the good penny stocks to invest in are. Why gamble and invest in stocks if you do not know which ones to buy? Many people use penny stock newsletters as a system as these services share penny stock ideas, sometimes on a daily basis.