Penny stocks are generally stocks that trades under $1.00 per share (this can be debated), the Securities and Exchange Commission (SEC) acknowledges a a more inclusive range of up to $5.00 per share to be considered a penny stock. But truly speaking (or writing, lol), there is no concrete definition of  penny stocks. You are probably wondering, “then, how do I know what to consider a penny stock.” Well…slow your horses, I am about to explain.

Depending on who and what you are dealing with, penny stocks can be defined differently. I am going to show you three different ways you can define penny stocks, this will help you in spotting them out there in the whole arena of the stock market.

Penny stocks can be defined by…..

Price per share: like I mentioned earlier, the SEC considers any stock below $5.00 per share to be a penny stock. But this is not always the case for everyone else, different organization or individuals might have or form a different opinion. For example I consider any stock below $1.00 a penny stock (hence the name penny stock).

Market the stock trades on: Most people consider stocks that trade on the OTCBB (or OTC), and Pink Sheet to be penny stocks. The markets that trade penny stocks are considered risky by the so-called-Wall-Street-experts, but like I always say “high risk equal high return.”

Market capitalization: Is simply the total trading value of the company. To figure this out this value, you need to take the total outstanding shares and multiply it by the selling price per share of the company. For example Spongetech (SPNG) is currently trading at a share price of  $0.02, so if you multiply this by the shares outstanding (722 million) it will equal a little more than $14 million for the trading value of Spongetech.

Generally speaking, some companies will fall into one or more of these category. To make it a little easy for yourself, you can consider a company trading on the OTCBB with a market capitalization  less than $20 million to be a penny stock.

Now that you have a general understanding of penny stocks, it’s time to take some actions towards that knowledge, right? Well in the near future I will be recommending some penny stock picks that I think you can take advantage of and make about 10% to 15% (even more) in a week, on a consistent basis.  Subscribe today (Email or RSS), so that you don’t miss out of this opportunity to create wealth for yourself.

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