First, understand that there are different definitions of penny stock, which is more of a generic term than a numeric target. For example, in the U.S., penny stocks are typically those that sell for less than five dollars and are traded over-the-counter, outside of the large exchanges. However, in the U.K., the term usually refers to small cap stocks.

Unfortunately, there is one penny stock constant. When you learn to read stock quotes and learn to read stock charts, you will see some good or disturbing patterns and trends that apply to penny stocks. Understand the risks associated with this stock type and do your research just as diligently as for a higher priced stock. If you pay attention to your investing course, learn how to trade stocks properly, and play a simulation stock game seriously, you might find some hidden winners.