Penny shares are low-priced stocks that trade for less than $5 per share. They are often issued by small companies with limited operating histories and can be highly speculative investments.
Despite their risks, penny shares can offer the potential for high returns. If a penny stock’s price increases, even by a small amount, the percentage gain can be significant. For example, if a penny stock that is trading at $0.50 per share increases to $1 per share, that is a 100% gain. However, it is important to remember that penny stocks are also very volatile and can lose value just as quickly as they gain it.