Understanding penny stocks is an on-going quest. Some traders spend months and years in the effort to grasp the ins and outs of penny stocks. Let’s try a few basics to start.

First, while there is no official definition, there are three criteria that are generally used in attempting to define penny stocks:

1. price per share - stocks that trade for less than a certain amount, usually $5.00 or less per share;

2. the market the stock trades on - if the stock is traded on “Pink Sheets”, for example, it is considered to be a penny stock; and

3. market capitalization - market cap is the total trading value of a company and is determined by multiplying the value of each share of stock by the total number of outstanding shares.

In practice, however, the actual definition of a penny stock depends on who you ask. One common characteristic of all definitions is that penny stocks are high risk/high reward investments. Another common characteristic is that these stocks are often volatile and unpredictable, and something defined as a penny stock in the morning may not be a penny stock in the afternoon. Penny stocks can often undergo dramatic price swings based on the slightest provocation and can rise or fall 50% or more during a trading day.

There are many reasons to invest in penny stocks. As a trader, you may have limited capital or want an exciting investment without waiting years to realize profits. Traders generally hold penny stocks for shorter time frames, and attempt to pull returns from the stock in a matter of months rather than years. Sometimes a new investor will want to learn the basics of buying and selling shares using low-priced investments.

The bottom line is penny stocks are fun and exciting and that is why many people work at understanding penny stocks.

July 2008 - Posts - MSNBC Firstread

THE SHORT LIST. Per Adam Aigner-Treworgy, McCain was asked his feelings on Gov. Tim Pawlenty (R-MN). “He’s a great, fine person. Reelected in one of the toughest reelection years in the history of the Republican Party. He comes from a -- his ...

July 2008 - Weblogs.sun-sentinel.com

U.S. Rep. Robert Wexler, D-Delray Beach, reports that his home in Maryland is "not a principal residence.'' Wexler's under media scrutiny after FOX News aired an interview Tuesday in which Wexler admits the home he uses as his Florida residence ...

Cis' blog roundup - Friday - Spokane Spokesman-Review

I'm not here - really - but Cis sent this to me and it looked like he put quite a bit of time into it, so here you go: Notes on a Napkin hits on every parents fear. The protection of our children. And she gives you a phase to keep in your mind ...

Category: Facebook - ZDNet Blogs

Posted by Larry Dignan @ 2:22 pm A U.S. Senate panel on Wednesday picked apart behavioral Web advertising as executives from the likes of Google, NebuAd and Facebook touted their privacy controls and even went as far as noting that ads are good for ...

Update: Library Has 10 Copies of "Water for Elephants" - Spokane Spokesman-Review

Librarian Bette Ammon e-mailed a few minutes ago to say that "Water the Elephants," the first selection for the new Huckleberries Online Book Club, arrived at the library Friday. They'll be available this evening. Three are reserved, including one by ...

Jennifer Garner is Queen of The Kingdom - Daily Blabber

I don't know what it is about Jennifer Garner that I like so much. Maybe it's her girl-next-door quality or because I so loved her in 13 Going on 30 (especially the scene with the Thriller dance!), but I just think she's adorable. Here's Mrs. Ben ...

Failed Trades - Forbes

A simple Freedom of Information Act request has reignited debate over the influence of naked short-selling in the stock markets. Late Thursday and all day Friday, bloggers and posters in investment Web site chat rooms were furiously debating the ...