S&P 500   4,288.05
DOW   33,507.50
QQQ   358.27
Powerball jackpot rises to $1.04 billion after another drawing without a big winner
BREAKING: Tiny biotech successfully treats blindness (Ad)
Federal agency sues Chipotle after a Kansas manager allegedly ripped off an employee's hijab
Who is Arthur Engoron? Judge weighing future of Donald Trump empire is Ivy League-educated ex-cabbie
66,000% upside on tiny biotech? (Ad)
Promoting tradition as well as beans, Ethiopian coffee shops find fans far from home
Federal student loan payments are starting again. Here's what you need to know
66,000% upside on tiny biotech? (Ad)
Native Hawaiian neighborhood survived Maui fire. Lahaina locals praise its cultural significance
Disney, DeSantis legal fights ratchet up as company demands documents from Florida governor
S&P 500   4,288.05
DOW   33,507.50
QQQ   358.27
Powerball jackpot rises to $1.04 billion after another drawing without a big winner
BREAKING: Tiny biotech successfully treats blindness (Ad)
Federal agency sues Chipotle after a Kansas manager allegedly ripped off an employee's hijab
Who is Arthur Engoron? Judge weighing future of Donald Trump empire is Ivy League-educated ex-cabbie
66,000% upside on tiny biotech? (Ad)
Promoting tradition as well as beans, Ethiopian coffee shops find fans far from home
Federal student loan payments are starting again. Here's what you need to know
66,000% upside on tiny biotech? (Ad)
Native Hawaiian neighborhood survived Maui fire. Lahaina locals praise its cultural significance
Disney, DeSantis legal fights ratchet up as company demands documents from Florida governor
S&P 500   4,288.05
DOW   33,507.50
QQQ   358.27
Powerball jackpot rises to $1.04 billion after another drawing without a big winner
BREAKING: Tiny biotech successfully treats blindness (Ad)
Federal agency sues Chipotle after a Kansas manager allegedly ripped off an employee's hijab
Who is Arthur Engoron? Judge weighing future of Donald Trump empire is Ivy League-educated ex-cabbie
66,000% upside on tiny biotech? (Ad)
Promoting tradition as well as beans, Ethiopian coffee shops find fans far from home
Federal student loan payments are starting again. Here's what you need to know
66,000% upside on tiny biotech? (Ad)
Native Hawaiian neighborhood survived Maui fire. Lahaina locals praise its cultural significance
Disney, DeSantis legal fights ratchet up as company demands documents from Florida governor
S&P 500   4,288.05
DOW   33,507.50
QQQ   358.27
Powerball jackpot rises to $1.04 billion after another drawing without a big winner
BREAKING: Tiny biotech successfully treats blindness (Ad)
Federal agency sues Chipotle after a Kansas manager allegedly ripped off an employee's hijab
Who is Arthur Engoron? Judge weighing future of Donald Trump empire is Ivy League-educated ex-cabbie
66,000% upside on tiny biotech? (Ad)
Promoting tradition as well as beans, Ethiopian coffee shops find fans far from home
Federal student loan payments are starting again. Here's what you need to know
66,000% upside on tiny biotech? (Ad)
Native Hawaiian neighborhood survived Maui fire. Lahaina locals praise its cultural significance
Disney, DeSantis legal fights ratchet up as company demands documents from Florida governor

Most Popular Penny Stocks

Penny stocks are public companies that have a share price of under $1.00 and a market capitalization of under $100 million. This page lists the most popular penny stocks among MarketBeat Subscribers. These stocks are sorted by the number of MarketBeat users following each company. Learn more about investing in penny stocks.

MarketRank™ evaluates a company based on dividend strength, earnings, valuation, analysts forecasts, and more.
Available with a MarketBeat All Access Subscription
MarketRank™Upgrade to All Access to use the All Ranks Filter
Media sentiment refers to the percentage of positive news stories versus negative news stories a company has received in the past week.
Available with a MarketBeat All Access Subscription
Media SentimentUpgrade to All Access to use the All Sentiments Filter
Analyst consensus is the average investment recommendation among Wall Street research analysts.
Available with a MarketBeat All Access Subscription
Analyst ConsensusUpgrade to All Access to use the All Ratings Filter
CompanyCurrent PriceMarketBeat FollowersMarket CapTrading VolumeIndicator(s)
Canopy Growth Co. stock logo
CGC
Canopy Growth
$0.78
-3.8%
10,217$573.39 million30.40 million shsShort Interest ↑
Aurora Cannabis Inc. stock logo
ACB
Aurora Cannabis
$0.59
-1.9%
6,634$242.42 million8.81 million shsGap Up
Inovio Pharmaceuticals, Inc. stock logo
INO
Inovio Pharmaceuticals
$0.39
+2.4%
4,378$104.28 million970,002 shsAnalyst Report
Short Interest ↓
Sorrento Therapeutics, Inc. stock logo
SRNE
Sorrento Therapeutics
$0.09
-6.2%
4,238$44.36 million3.50 million shsAnalyst Report
Workhorse Group Inc. stock logo
WKHS
Workhorse Group
$0.41
3,583$87.35 million18.61 million shsGap Up
Ocugen, Inc. stock logo
OCGN
Ocugen
$0.40
-1.2%
2,872$102.60 million937,226 shsNews Coverage
Mullen Automotive, Inc. stock logo
MULN
Mullen Automotive
$0.45
+2.4%
2,813$83.61 million26.70 million shsGap Down
Amarin Co. plc stock logo
AMRN
Amarin
$0.92
+1.1%
2,774$371.52 million998,645 shs
Rite Aid Co. stock logo
RAD
Rite Aid
$0.45
-3.1%
2,360$25.40 million3.62 million shsUpcoming Earnings
Options Volume
Inseego Corp. stock logo
INSG
Inseego
$0.42
+5.0%
2,262$49.09 million323,282 shsShort Interest ↑
Bed Bath & Beyond Inc. stock logo
BBBY
Bed Bath & Beyond
$0.08
-28.3%
2,029$33.78 million8.82 million shsNews Coverage
Gap Down
Vaxart, Inc. stock logo
VXRT
Vaxart
$0.75
1,884$114.58 million489,417 shsPositive News
22nd Century Group, Inc. stock logo
XXII
22nd Century Group
$0.98
+1.5%
1,446$20.61 million213,783 shsShort Interest ↑
Invitae Co. stock logo
NVTA
Invitae
$0.61
1,428$161.60 million8.47 million shsAnalyst Upgrade
News Coverage
Gap Up
NightHawk Biosciences, Inc. stock logo
NHWK
NightHawk Biosciences
$0.53
+4.4%
1,270$13.75 million30,018 shsNews Coverage
Gap Up
CalAmp Corp. stock logo
CAMP
CalAmp
$0.41
+7.3%
1,223$15.24 million104,425 shsUpcoming Earnings
Analyst Report
Short Interest ↑
News Coverage
Gap Up
T2 Biosystems, Inc. stock logo
TTOO
T2 Biosystems
$0.22
+23.9%
1,214$73.69 million110.22 million shsAnalyst Report
Insider Selling
News Coverage
Gap Up
VBI Vaccines Inc. stock logo
VBIV
VBI Vaccines
$0.67
1,199$15.24 million188,678 shsShort Interest ↑
News Coverage
Canoo Inc. stock logo
GOEV
Canoo
$0.49
+1.1%
1,141$307.89 million15.92 million shs
Electrameccanica Vehicles Corp. stock logo
SOLO
Electrameccanica Vehicles
$0.66
1,113$78.13 million221,149 shsPositive News
Gap Down
Meta Materials Inc. stock logo
MMAT
Meta Materials
$0.21
+6.0%
1,061$98.97 million3.94 million shsGap Up
Onconova Therapeutics, Inc. stock logo
ONTX
Onconova Therapeutics
$0.71
-1.2%
1,044$14.92 million26,122 shsAnalyst Report
Short Interest ↑
News Coverage
Sangamo Therapeutics, Inc. stock logo
SGMO
Sangamo Therapeutics
$0.60
+3.9%
997$106.23 million2.47 million shsInsider Selling
News Coverage
Gap Up
Veru Inc. stock logo
VERU
Veru
$0.72
-4.4%
955$64.91 million1.14 million shsAnalyst Report
Citius Pharmaceuticals, Inc. stock logo
CTXR
Citius Pharmaceuticals
$0.68
-1.1%
919$108.72 million359,799 shsPositive News
Esperion Therapeutics, Inc. stock logo
ESPR
Esperion Therapeutics
$0.98
+2.3%
876$104.85 million1.95 million shsShort Interest ↑
Analyst Revision
News Coverage
Atossa Therapeutics, Inc. stock logo
ATOS
Atossa Therapeutics
$0.74
-2.5%
866$92.64 million229,066 shsGap Up
Castor Maritime Inc. stock logo
CTRM
Castor Maritime
$0.44
+9.7%
849$41.34 million604,030 shsPositive News
Ekso Bionics Holdings, Inc. stock logo
EKSO
Ekso Bionics
$0.73
+2.9%
835$10.12 million13,532 shsAnalyst Report
Short Interest ↑
News Coverage
Gap Down
Nektar Therapeutics stock logo
NKTR
Nektar Therapeutics
$0.60
-2.4%
809$113.24 million1.51 million shsAnalyst Revision
Village Farms International, Inc. stock logo
VFF
Village Farms International
$0.80
-4.1%
769$87.92 million954,214 shsPositive News
Westwater Resources, Inc. stock logo
WWR
Westwater Resources
$0.67
743$35.64 million63,863 shs
SmileDirectClub, Inc. stock logo
SDC
SmileDirectClub
$0.42
-6.6%
735$167.08 million5.39 million shsNews Coverage
Gap Up
High Trading Volume
ReWalk Robotics Ltd. stock logo
RWLK
ReWalk Robotics
$0.76
+3.4%
700$45.55 million93,818 shsInsider Buying
News Coverage
Positive News
Nabriva Therapeutics plc stock logo
NBRV
Nabriva Therapeutics
$0.45
+7.1%
644$14.41 million7,256 shsAnalyst Report
News Coverage
Gap Up
Akoustis Technologies, Inc. stock logo
AKTS
Akoustis Technologies
$0.75
-5.2%
619$54.48 million394,160 shsShort Interest ↓
Gap Up
VirnetX Holding Co. stock logo
VHC
VirnetX
$0.25
604$18.20 million226,741 shsUpcoming Earnings
Gap Up
Outlook Therapeutics, Inc. stock logo
OTLK
Outlook Therapeutics
$0.22
599$57.51 million2.33 million shs
Capstone Green Energy Co. stock logo
CGRN
Capstone Green Energy
$0.71
+41.8%
597$13.01 million2.05 million shsUpcoming Earnings
Positive News
High Trading Volume
Aterian, Inc. stock logo
ATER
Aterian
$0.33
+5.1%
590$27.90 million882,340 shsNews Coverage
High Trading Volume
ASAP, Inc. stock logo
WTRH
ASAP
$0.14
573$28.06 million6,047 shsNews Coverage
Gap Down
Daré Bioscience, Inc. stock logo
DARE
Daré Bioscience
$0.46
-1.7%
569$40.54 million120,489 shsShort Interest ↓
Sunworks, Inc. stock logo
SUNW
Sunworks
$0.52
+2.0%
559$23.03 million936,119 shsNews Coverage
Gap Up
FibroGen, Inc. stock logo
FGEN
FibroGen
$0.86
-11.2%
556$84.75 million7.24 million shsPositive News
Tattooed Chef, Inc. stock logo
TTCF
Tattooed Chef
$0.03
556$13.03 million268,912 shsGap Down
Credit Suisse Group AG stock logo
CS
Credit Suisse Group
$0.89
531$2.77 billion0 shsAnalyst Report
Aeva Technologies, Inc. stock logo
AEVA
Aeva Technologies
$0.76
+0.9%
513$170.36 million544,720 shsAnalyst Report
News Coverage
Gap Up
Phunware, Inc. stock logo
PHUN
Phunware
$0.18
503$21.53 million2.34 million shsPositive News
Gap Up
Genprex, Inc. stock logo
GNPX
Genprex
$0.39
+3.9%
501$23.46 million178,711 shsPositive News
vTv Therapeutics Inc. stock logo
VTVT
vTv Therapeutics
$0.48
+3.9%
495$49.99 million55,865 shsGap Down
Moleculin Biotech, Inc. stock logo
MBRX
Moleculin Biotech
$0.43
467$12.74 million52,104 shsAnalyst Report
Short Interest ↑
Fortress Biotech, Inc. stock logo
FBIO
Fortress Biotech
$0.29
-3.2%
455$38.64 million167,876 shsAnalyst Report
Seelos Therapeutics, Inc. stock logo
SEEL
Seelos Therapeutics
$0.18
+3.8%
442$23.53 million5.46 million shsUpcoming Earnings
Positive News
Hycroft Mining Holding Co. stock logo
HYMC
Hycroft Mining
$0.30
+2.6%
432$60.26 million704,425 shsShort Interest ↑
Oatly Group AB stock logo
OTLY
Oatly Group
$0.90
+1.8%
432$530.78 million2.77 million shsGap Up
TRX Gold Co. stock logo
TRX
TRX Gold
$0.37
-2.1%
432$101.34 million230,411 shsAnalyst Report
News Coverage
Eiger BioPharmaceuticals, Inc. stock logo
EIGR
Eiger BioPharmaceuticals
$0.31
431$13.51 million283,285 shsAnalyst Report
Gap Up
AquaBounty Technologies, Inc. stock logo
AQB
AquaBounty Technologies
$0.24
+3.7%
420$17.05 million93,165 shsPositive News
Gap Up
AIM ImmunoTech Inc. stock logo
AIM
AIM ImmunoTech
$0.46
+3.2%
414$22.14 million81,874 shsNews Coverage
Ocean Power Technologies, Inc. stock logo
OPTT
Ocean Power Technologies
$0.39
402$22.93 million166,299 shsPositive News
BioSig Technologies, Inc. stock logo
BSGM
BioSig Technologies
$0.49
+1.7%
394$36.66 million253,546 shsUpcoming Earnings
Adaptimmune Therapeutics plc stock logo
ADAP
Adaptimmune Therapeutics
$0.78
-0.7%
394$775.49 million207,862 shsNews Coverage
Synchronoss Technologies, Inc. stock logo
SNCR
Synchronoss Technologies
$0.96
+2.8%
393$89.66 million51,650 shsPositive News
Gap Down
Iterum Therapeutics plc stock logo
ITRM
Iterum Therapeutics
$0.80
+15.2%
388$10.45 million87,134 shsPositive News
Gap Up
High Trading Volume
Chimerix, Inc. stock logo
CMRX
Chimerix
$0.96
-1.1%
386$85.02 million594,752 shsShort Interest ↑
News Coverage
Clearside Biomedical, Inc. stock logo
CLSD
Clearside Biomedical
$0.87
+3.6%
380$53.96 million70,780 shsAnalyst Report
Short Interest ↑
News Coverage
Gap Up
Avino Silver & Gold Mines Ltd. stock logo
ASM
Avino Silver & Gold Mines
$0.52
-2.3%
372$63.50 million423,609 shs
Avino Silver & Gold Mines Ltd. stock logo
ASM
Avino Silver & Gold Mines
$0.52
-2.3%
372$63.50 million423,600 shs
Compugen Ltd. stock logo
CGEN
Compugen
$0.93
+5.7%
366$80.56 million64,581 shsShort Interest ↓
Analyst Revision
News Coverage
Nautilus, Inc. stock logo
NLS
Nautilus
$0.85
+14.8%
359$30.68 million393,568 shsNews Coverage
LiveOne, Inc. stock logo
LVO
LiveOne
$0.96
-1.4%
358$86.25 million227,126 shsNews Coverage
Lightning eMotors, Inc. stock logo
ZEV
Lightning eMotors
$0.56
-3.4%
343$10.53 million7,598 shsGap Up
Mesa Air Group, Inc. stock logo
MESA
Mesa Air Group
$0.86
-4.9%
341$35.07 million354,441 shsShort Interest ↑
News Coverage
Vascular Biogenics Ltd. stock logo
VBLT
Vascular Biogenics
$0.24
+6.3%
338$18.98 million775,790 shsAnalyst Report
Pieris Pharmaceuticals, Inc. stock logo
PIRS
Pieris Pharmaceuticals
$0.30
336$29.46 million455,153 shsAnalyst Report
Short Interest ↓
Positive News
Gap Down
Cidara Therapeutics, Inc. stock logo
CDTX
Cidara Therapeutics
$0.94
334$85.04 million228,123 shsAnalyst Upgrade
Short Interest ↑
TMC the metals company Inc. stock logo
TMC
TMC the metals
$0.99
-1.9%
332$290.34 million723,004 shsGap Down
Precision BioSciences, Inc. stock logo
DTIL
Precision BioSciences
$0.34
-4.2%
327$39.27 million588,717 shs
Comstock Inc. stock logo
LODE
Comstock
$0.41
-3.1%
326$45.03 million371,604 shsAnalyst Report
News Coverage
Gap Up
Cenntro Electric Group Limited stock logo
CENN
Cenntro Electric Group
$0.24
325$74.29 million1.20 million shsStock Split
Short Interest ↑
CBAK Energy Technology, Inc. stock logo
CBAT
CBAK Energy Technology
$0.82
+2.7%
321$73.27 million60,559 shsNews Coverage
Positive News
Affimed stock logo
AFMD
Affimed
$0.48
-2.5%
321$71.37 million553,228 shsAnalyst Report
Short Interest ↑
Gap Up
Cano Health, Inc. stock logo
CANO
Cano Health
$0.25
-10.1%
315$136.61 million3.61 million shsOptions Volume
News Coverage
23andMe Holding Co. stock logo
ME
23andMe
$0.98
-4.1%
314$461.95 million2.15 million shsGap Down
Acer Therapeutics Inc. stock logo
ACER
Acer Therapeutics
$0.82
-0.7%
312$19.94 million189,637 shsShort Interest ↑
Qurate Retail, Inc. stock logo
QRTEA
Qurate Retail
$0.61
+4.6%
306$235.84 million4.57 million shsNews Coverage
Inuvo, Inc. stock logo
INUV
Inuvo
$0.21
296$29.52 million148,818 shsAnalyst Report
News Coverage
Frequency Therapeutics, Inc. stock logo
FREQ
Frequency Therapeutics
$0.37
271$13.51 million108,136 shsAnalyst Downgrade
News Coverage
Gap Up
Alpine 4 Holdings, Inc. stock logo
ALPP
Alpine 4
$0.73
+4.0%
261$19.33 million120,099 shsShort Interest ↑
Catalyst Biosciences, Inc. stock logo
CBIO
Catalyst Biosciences
$0.48
-1.6%
260$18.32 million119,508 shsShort Interest ↓
News Coverage
Gap Up
NuCana plc stock logo
NCNA
NuCana
$0.61
+1.8%
259$31.66 million33,365 shsNews Coverage
Gap Up
CorEnergy Infrastructure Trust, Inc. stock logo
CORR
CorEnergy Infrastructure Trust
$0.80
+3.9%
258$12.28 million52,842 shsAnalyst Report
News Coverage
Positive News
Tiziana Life Sciences Ltd stock logo
TLSA
Tiziana Life Sciences
$0.66
-1.6%
257$67.49 million52,533 shsShort Interest ↓
Gossamer Bio, Inc. stock logo
GOSS
Gossamer Bio
$0.83
+6.8%
255$187.65 million1.14 million shs
SPI Energy Co., Ltd. stock logo
SPI
SPI Energy
$0.80
-2.5%
247$24.67 million84,714 shsNews Coverage
Gap Up
Lilium stock logo
LILM
Lilium
$0.71
-1.3%
244$271.59 million3.42 million shsGap Up
Nuvve Holding Corp. stock logo
NVVE
Nuvve
$0.34
+4.0%
243$10.92 million206,393 shs
PAVmed Inc. stock logo
PAVM
PAVmed
$0.29
-5.0%
236$32.82 million534,911 shsPositive News
JOANN Inc. stock logo
JOAN
JOANN
$0.72
+2.3%
235$30.17 million71,485 shsOptions Volume
News Coverage
Companhia Brasileira De Distribuicao stock logo
CBD
Companhia Brasileira De Distribuicao
$0.67
+3.1%
235$179.59 million367,229 shsShort Interest ↓
Positive News
Gap Up
What to Know About Investing in Penny Stocks

Investing in penny stocks may seem like a great idea because of the low initial investment involved in your investment. In short, the main perk of investing in penny stocks is this: They're cheap! They may appeal to investors or traders who don't have a lot of capital to invest or who may be just getting started trading.

Even though they require minimal investment, they also carry significant risks. To help you decide whether penny stocks make sense for your portfolio, we'll walk through a comprehensive definition of penny stocks, whether you can make money with penny stocks, the risks associated with penny stocks, how to choose penny stocks and how to choose the right penny stocks.

By the time you're done reading, you'll have a better idea of whether you want to take on penny stocks as part of your investment strategy. 

In order to explain penny stocks, let's first go over the definition of a stock. A stock, often called a "security," represents a unit of ownership of a company. Penny stocks, which are also called “microcap” or “nanocap” stocks, are low-value stocks of smaller companies. The stocks are slightly misnamed because they do not necessarily cost a penny at all. However, they are often priced under $2 per share. The Securities and Exchange Commission (SEC), defines penny stocks as those with a market capitalization of less than $250 million.

Penny stocks are some of the most high-risk securities you can trade because they have a small market capitalization and trade for a relatively low share price. 

Where do you find penny stocks? Some penny stocks trade on large exchanges like the New York Stock Exchange (NYSE) or the Nasdaq. However, many penny stocks trade on the over-the-counter (OTC) market or off-trading exchange. This is a decentralized market which means you can trade stocks or other instruments between two parties, without a central exchange or broker. You can access thousands of stocks on the OTC Markets, which are traded on three markets.

Yes, it is possible to make money when you trade penny stocks. However, it's important to remember that it is possible to invest in a wide variety of securities and make money. However, it's important to focus on your reasoning behind choosing certain companies —you want to invest in the right companies based on your specific needs.

Penny stocks are usually considered high-risk investments due to their low price, high potential for fraud, lack of liquidity, small market capitalization, wide bid-ask spread and high potential for loss.

Penny stocks' low price can be a huge risk. Moving in either direction — a gain or a loss — can happen quickly. For example, let's say a penny stock moves from $1 a share to $1.50, it's an incredible gain. However, it could also go the other way, going from $1 a share to 50 cents per share.

Because of this inherent volatility, penny stocks can be hugely risky. Volatility means that the price of a stock increases or decreases, and higher volatility often equates to higher risk.

Some penny stocks have been pushed by fraudsters, who have a dormant shell company cover and push pump-and-dump schemes. They buy low-priced penny stocks and spread "news" that the stocks are excellent, then increase the price. These fraudsters typically get rid of their shares and investors end up with worthless shares. 

One of the best ways to avoid this issue is to thoroughly investigate the company. Incredible  growth can be a red flag because the shell company itself might exist on fairly spindly legs. It's important for investors to research whether the company has been raised from the dead, know where the stock trades — most don't trade on the major exchanges and check into frequent changes of a company's name.

The OTC Markets Group categorizes the stocks into various divisions (based on factors such as company integrity and disclosures) which essentially divides them into higher-quality stocks to lower-quality stocks:

  • OTCQX (best tier)
  • OTCQB (middle tier) 
  • OTC Pink (bottom tier)

Liquidity means how easy it is for you to transform an asset from stock into cash. Liquidity refers to how easily securities can be sold. You can consider a stock as liquid when you can't sell them without experiencing a loss when you sell. Because many people don't invest in penny stocks, it's tough to unload them, particularly when their price starts to go down.

Penny stocks are often considered small cap stocks, which means that they have a small market capitalization. It's a company's share price times the number of shares outstanding. A small market capitalization has a rough capitalization between $300 million and $2 billion.

Ultimately, small-cap companies tend to be riskier investments than larger companies because they don't have the same resources of large-cap companies, which means that small caps are more susceptible to challenges than larger companies.

The bid-ask spread is the difference between the highest offered purchase price and the lowest offered sales price for a security. The wider the bid-ask spread, the more volatile the stock, which means that the stocks may pinball more quickly compared to stable stocks.

How do you trade penny stocks? Let's take a quick look at how to trade penny stocks, step by step. Perhaps one of the most important portions of the decision is to do your research before you start trading. Let's take a look.

It's important to do wide research before you make a final decision about your decision to trade penny stocks. Most importantly, consider whether these stocks are legitimate prior to investing — one of the worst reasons to choose them is that you get cheap shares.

How does a particular company make money? You can learn a lot by checking out the Securities and Exchange Commission (SEC) website in order to determine whether the company has been delisted from a major exchange. The company's most recent SEC filing will also give you major clues into whether you should invest in a particular penny stock. We'll also walk through a few more factors you should consider before you invest in the next section, such as revenues and fundamentals.

It's important to choose a broker that matches your preferences and needs. Researching the differences between brokers can help you decide. For example, you may want to compare the charges for penny stock trades from one brokerage account to another because many brokers charge extra for penny stocks. Also, take a look at current incentives. 

You may also want to consider the platform available among the brokers you're considering. You likely want to find the best platform that fits your comfort level. For example, if you need a lot of hand-holding, you may want to consider a platform that offers a lot of helpful tools. On the other hand, if you're an experienced trader, you may want to consider a more complicated platform that offers more bells and whistles, including independent third-party research, educational resources and planning tools.

Once you've landed on the right type of brokerage account for you, fill out the new account application, fund the account based on the required minimum investment. Finally, you can get going with your own research.

The OTC Markets website can give you a good idea of which direction you should go, particularly when you consider which investments you want to pull from high- to low-tier investments: OTCQX (best tier), OTCQB (middle tier) and OTC Pink (bottom tier). Choosing from these categories can help you determine how well your trades may pay off.

Consider learning how to trade from your broker's platform. Practicing how to trade using "fake" trading (also known as paper trading) can also help you practice so don't suffer from staggering penny stock losses.

Finally, never invest more than you're willing to lose. You could risk losing some or all of the money you invest in penny stocks. 

When you want to invest in the "right" penny stocks, it's important to take a look at various factors before you hone in on a great penny stock for your portfolio, including the soundness of the business and fundamentals as well as the management of the company. 

How does the business operate? Have there been major changes in the business lately, such as an addition to the business or a switch in management? Have the revenues of the company been growing? Furthermore, what are the basic fundamentals of the company and how has the company performed based on hard-and-fast fundamentals? 

A few key fundamentals include finding the net sales/earnings before interest, taxes, depreciation and amortization (EBITDA). (You can calculate net income by subtracting all expenses from total revenue and in order to calculate EBITDA, you add the interest and tax line items into the mix as well as the depreciation and amortization.) You can also look into other fundamentals, such as low price-to-earnings ratio and more. 

Looking into how the company is managed can give you a bird's eye view of how well the company’s management team manages the company. Gather as much information as possible about the leadership of the company.

There's an argument that says you don't necessarily have to look into "all that" when trading because you're looking for small price movements, but there's value in doing the background work.

Ultimately, it's up to you whether you think you should go this route. If you're looking for a get-rich-quick scheme, it's important to understand that they are highly speculative investments that can offer a tantalizing image, such as quintupling your money over the course of a few weeks. However, this could be a mirage — in reality, you could be at risk for serious fraud and loss of funds. 

What are the alternatives to investing in penny stocks, particularly if you're interested in investing in a small amount of money? You may want to consider investing in fractional shares of stocks instead of penny stocks. Fractional shares mean that you purchase partial shares of larger companies for the same amount that you might spend on penny stocks. That way, you'll invest in more well-respected companies. You can consider using micro-investing apps (such as Acorns) which allow you to invest in fractional shares of these well-regarded companies. 

On the other hand, if you do comprehensive research and find that a particular company meets your needs, you may want to give penny stock trading a try. 

Melissa Brock

About Melissa Brock

Contributing Author: Dividend Stocks, Retirement

While working in college admission, Melissa Brock pursued a freelance writing and editing career. She currently works as a full-time freelance writer and financial editor covering higher education, investing, personal finance, mortgages, college savings, insurance, and more. 

She developed her website, College Money Tips, to help families navigate the college journey. She connects with a wide-reaching audience through her site, through an upcoming digital course, and the myriad of publications for which she writes. Melissa graduated summa cum laude with a bachelor of arts in communication studies with minors in psychology and Spanish from Central College. She's a longtime member of the National Association of College Admission Counseling (NACAC).
Contact Melissa Brock via email at brockm1@central.edu.

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