Penny Stock Investing: A General Impression

Everybody speaks of penny stock. But everybody is not well-conversant with this term. Penny stock investing does not mean all types of stock trading. Before you start trading in penny stocks, you need to know the right definition of what a penny stock is. Some investors mistakenly assume that a penny stock is a stock that trades for a cent. While there are a lot of stocks that trade for a cent and when traded correctly can yield vast profits, the definition is broader. Some investors consider any stock trading under $5 to be a penny stocks. This is almost the right definition of it. Those investors seek to avoid stocks they believe to be highly uncertain. In reality these stocks can be described as those stocks that trade on OTC bulletin board and pink sheets.
It won't be right if we say that penny stocks are all frauds. There are also some stocks that are run by good companies. But it also can't be denied that some scammers create a wrong publication of their stocks. They purchase a stock and then hype it up by sending out positive e-mails and internet ads causing the price of the stock to jump. They act as if they knew this is the next stock to rise. Spammers will sell at a net gain when the price is up, leading to fall in price. Thus victimized investors suffer a lot because the price doesn't rise in future. Still there are many investors who have won huge money from this business. Therefore one thing can be told in this matter that turn to your own research about the company before going for penny stock investing.
According to market report recap of penny stock investing, there is adequate liquidity in penny stocks. Liquidity means having enough volume to easily buy and sell your shares.
Finally it can be told that nothing is a sure thing in penny stock investing. So the stock you were in completely went down the drain. Face it, these kinds of surprises can happen. There is no chart or analysis out there that can predict a stock tanking sometimes.