That's simple! They're easy to buy and sell (liquid). Vital information onany exchange listed common stock is easy to obtain. The performance of of penny stocks can be easily tracked. Broker commissions to buy or sell common penny stocks is so low that we can now make frequent trades.

When you buy a share of penny stock, you immediately become part
owner of that company. The more shares you own, the bigger percentage
of the company you own. You can make or lose money if the price of your
shares go up or down. You can also make money off the dividends paid.

The price of penny stocks can move up or down for many reasons. New
product announcements, good news/bad news, a major brokerage firm
recommendation, merger announcements, and increased sales and
profits, are the most obvious reasons.

Common stocks fall into different categories. The Blue-Chip stocks come
to mind first. These are the Wall Street darlings. They're usually very
expensive to own. They usually fall into the fifty to one hundred dollar
price range. They're so expensive most people can't buy many shares.

I'm not going to spend a lot of time talking about stocks that we won't be
buying, so I'll just give brief mention to their existence.

Growth Stocks: Well known younger companies. ($20 to $50.00 range).
Income Stocks: Safe stocks that return profits (dividends) to stockholder.
Cyclical Stocks: Price moves up and down with great regularity.
Trendy Fad Stocks: Fast moving high flyers hyped-up by Wall Street.

And finally .... Penny Stocks or Low-Price Stocks: (small-cap and micro-cap).
This is where we'll be spending all our time and energy. We'll be focusing
in on stocks that cost $5.00 or less per share. We'll be looking for high
quality companies that have good sales and earnings records.

These will be penny stocks that are traded on the NYSE, the American Stock
Exchange, and the OTC (Over the Counter National Market System). We'll
sometimes buy and sell stocks listed as (Pink-Sheet) stocks or (Bulletin Board) stocks but, we'll stick mostly with the major exchanges.