Penny Stocks Guide: Risks & Scam Avoidance

What Are Penny Stocks?

Penny stocks are low-priced, highly speculative securities that often trade on smaller exchanges or OTC markets. They can move fast, but they can also collapse just as quickly.

Why They Are Risky

Many penny stocks have weak financials, low liquidity, and poor disclosure. That makes them vulnerable to manipulation and large price swings.

How to Approach Them

• Use small position sizes.
• Stick to limit orders.
• Ignore hype and verify filings.

Key Takeaways

• Penny stocks are speculative.
• Liquidity and disclosure matter.
• Most beginners should avoid them.