In the United States, penny stocks are stocks that trade for under $5 a share (according to the Securities and Exchange Commission). These stocks are also traded “over the counter” meaning they are traded though such services as the Pink Sheets and the OTC Bulletin Board.

Every day, hundreds of millions of shares of penny stocks are traded. Many investors are attracted to penny stocks because of their low price and easy entry fee into the world of online stock trading. However, penny stocks can also be a risky investment. This is due in part to the lack of regulation of the penny stock industry. Because most of these stocks belong to small, often recently formed, companies, legitimate information about these companies is often difficult to find online. Furthermore, some of these companies many be manipulating their share price by paying for positive stock recommendations, sending spam emails promoting their stocks, and other unethical practices.

Penny stocks thus offer both an affordable and risky investment for stock investors. There are, however, those who have found penny stock investments to be quite lucrative. There are ways to help mitigate the risks of penny stocks, and by pursuing a sound penny stock investment strategy many investors have made millions in this market.

One of the most successful strategies for penny stock investing has been developed by the James Connelly, sometimes known as the “Penny Stock Prophet” for his success in day trading penny stocks. While still a college student at MIT, Connelly was able to take an initial investment of $1000 and turn it into $1.3 million dollars, solely by trading penny stocks.

Click here to learn more about Connelly’s remarkable penny stock trading system.