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By definition, a penny stock is a common stock that sells for less than five dollars per share. These stocks are normally traded over the counter through the OTC Bulletin Board and are not traded in major stock exchanges like the New York Stock Exchange and the NASDAQ Stock Market.

Although it is tempting to invest in stocks that are less five dollars a share, most experts label them as dangerous commodities. Penny stocks can be compared to slot machines. As you can see, they are real risky. You have to but only a quarter into a slot machine to play the game, if you want to play the penny stock game you will need to invest up to five dollars per share

The risk of both playing the penny stock game and playing slot machine is real risky. Both of them also have a very low return on investment. However, there are still instances were you can make a return of up to 2500% fast.

Are they safe to invest in? Yes, they are, if you buy penny stocks solely from reliable penny stock picks. Remember that like regular stocks, penny stocks are also peddled by traders. Of course you will have to make sure that the trader you are going to deal with and also the company you are about to invest in are both credible and have an outstanding record. Penny stocks are often subject to manipulation and fraud so being careful is paramount.

So how to get started trading penny stocks? First you need an investment strategy. This strategy will involve a systematic way of finding profitable penny stocks. When you buy penny stocks, it is also advised to have an entry and exit plan, and stick to it. Always keep in mind that even a drop of some cents in the price of the stock leads to a sizeable loss.

I recommend browsing the web and looking for websites offering penny stock picks. However, you need ot be careful, free information in in most cases not good at all. It is a good idea to spend some dollars buying hot penny stock picks from reliable sources online

It will take a while and some trades before you feel comfortable trading penny stocks, and it may also take a while before you make a profit

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