Although there are many people that do already buy penny stocks, there are probably even more people that do not even know what penny stocks are. What is referred to as a penny stock, is a share in a small company which is considered too small and therefore its shares too cheap, to be traded on the large stock markets like the NYSE or NASDAQ. These shares though, as with the more expensive ones, do decrease and increase in value and so by buying a share when it is cheap and them selling it when it goes up in price, a profit can be made. Those profits can be big as one share bought at a cost of just 8cents, may have a value of as much as $8 a couple of days later, depending on how the company for whom the share is, fares in its business transactions.
To be honest though, although increases like this do happen, usually if a share does increase in price, it will not increase so dramatically. Of course though, the shares you have may decrease in value in which case you could make a loss on your investment. In general terms it is considered that 90% of investors in penny stocks make a loss whilst just 10% of them make a profit however, of that 10%, some investors make a fortune, going on to become what is known as a penny stock millionaire. Many serious investors in the larger stock markets consider penny stock trading as being very risky as, with penny stock companies, there is no rules that they have to stick to, as there are with larger companies that trade their stocks on the NYSE or NASDAQ.
NYSE and NASDAQ come under the scrutiny of the Securities and Exchange Commission (SEC) which insists that any company wishing to sell their stock, must provide potential investors with information on their company. As penny stock companies are not governed by the SEC rulings, they do not have to divulge anything about their company, just hope that investors buy their stock anyway, which they do. Investors in penny stocks therefore, usually know very little about a company they may be investing in and that, to some, is considered a gamble and not an investment. If you are one of the many that wants to still trade in penny stocks, you can how to buy penny stocks online but basically, many of the professional stockbrokers will accept penny stock trading and so going through one of those is probably the best way to start and then move onto making your own investments as you understand the market for penny stocks better. The reason why so many people do still trade in penny stocks even though it may be a little bit of a gamble, is because to start doing so, you only need as little as $50 which is far less than you would need if you were considering investing in the main stock markets.