| When you consider the lure of day trading penny | | | | The risk with day trading is that it requires having a |
| stocks, remember that with this narrow field of | | | | keen understanding of a large number of companies |
| investing you're combining two of the most risky and | | | | in order to successfully execute a large number of |
| challenging fields into a single great leap of investing | | | | trades in a short amount of time. Day trading |
| boldness. Until recent years with the advent of | | | | requires significant capital and a vigilant sense of |
| electronic trading, day trading was solely the practice | | | | discipline to one's strategies. This is not something for |
| of the most experienced of stock brokers. And | | | | the faint of heart and it certainly is not a |
| penny stocks still involve some of the most | | | | get-rich-quick method. |
| manipulated speculative stocks on the market. | | | | The risks involved in penny stocks are many. Such |
| Day trading involves buying and selling currencies, | | | | stocks are often traded on quotation services which |
| stocks, stock options or futures trading within the | | | | don't require the same standards as AMEX, NASDAQ |
| same closing day. Most day traders (also known as | | | | or NYSE and aren't required to file with the SEC. |
| active traders) are employees of major banks or | | | | Additionally, their low value makes them susceptible |
| investment firms and have many years of | | | | to securities fraud techniques such as the pump and |
| rigorously-gained experience. | | | | dump and the chop stock. |
| Penny stocks have a variety of definitions. Most in | | | | When you combine these two risky, gambling fields, |
| the industry consider a microcap stock - a stock with | | | | you get day trading penny stocks. Can it be |
| a market capitalization under $250 million - which | | | | profitable? Certainly, but if you're an Internet |
| trades for less than $5 to be a penny stock. Others | | | | dreamer trying to make a quick buck, day trading |
| believe a penny stock technically trades outside of | | | | penny stocks is certainly not your safest or wisest |
| the major exchanges (AMEX, NYSE or NASDAQ) on | | | | option. |
| quotation services such as the OTCBB | | | | However, if you feel you can learn quickly and |
| (over-the-counter bulletin board) or Pink Sheets | | | | exercise the discipline to establish and maintain a |
| (technically the Pink OTC Markets). However, the | | | | specific strategy, you can earn serious money. Just |
| SEC (the Securities and Exchange Commission) | | | | don't be suckered into wild fantasies by shrewd |
| technically defines a penny stock as any low-priced | | | | fraudsters. |
| stock of a speculative nature. | | | | |