As explained in my book Penny Stocks & Micro Cap:
These stocks are risky
as many do not have information required by SEC and the major
exchanges. They are traded over the counter, OTC. They cannot be shorted
(and most likely you do not want to do so even it is allowed). Pier 1,
Ford and many others were all penny stocks at one time.
winner for several losers. However, the total profit could outpace the
total loss if the strategy is properly implemented. The purpose of this
book is to improve your odds of making a profit. Do not expect to be
You can buy 5000 shares at 1 cent each or one share
of Apple (in May 2013). When this penny stock moves up to 2 cents, you
make 100%. This is not the reason to invest in penny stocks but it shows
they’re volatile. At the same time, you may have a hard time to sell a
penny stock as the average volume is very low.