If you are new to penny stock trading then you may be wondering what the difference is between penny stocks and penny shares. There isn't much difference at all and in reality penny shares are just another name for penny stocks, so if you hear someone calling their penny stocks penny shares then you'll know that they're meaning the same thing.
Penny shares and penny stocks alike are stocks that are traded for typically below five dollars and are made available by smaller companies who are relatively new to the market. Penny stocks are traded on over the counter, or OTC on quotation services such as Pink Sheets and the OTC Bulletin Board. Penny shares are typically considered high risk investments by most industry experts and it is well known that with this sort of trading that you can either lose your shirt or make a tremendous profit literally overnight and this kind of volatility is what lures in many traders.
The penny stock industry is full of scams and illegitimate offers so it is essential that you do your homework on any source or other entity you choose to do business with so that you can ensure that they are in fact genuine. This means that you should not take anything you find online or in your email as truly legitimate and that you should always think twice if someone is promising you obscene returns overnight because in all likelihood it is a trick. This is not to say that the majority of penny stock newsletters and brokerages are illegitimate, and in reality the opposite is actually true and the bulk of newsletters and brokerages provide valuable services and information to their clients at sometimes free of charge. The problem is that there is still a good amount of fraudsters within this industry and if you are a new trader then you need to be careful so that you will not have to worry about losing your money the hard way.
Seth Lionni specializes in such areas as Penny Stock Trading and Penny Shares.