Penny stocks are stocks with market price below 1 unit of the local currency. It is not uncommon for stocks up to $5 to also be referred by penny stocks. These are often rather inactive, small-cap stocks. Due to their small-cap and illiquid nature, at times they can be speculated to high volatility. Penny stocks are highly speculative and risky. Many brokerages don't cover them simply because they are so difficult to track and predict.

Penny stocks are also sometimes referred to as house stocks. In the United States, penny stocks can be traded outside formal stock exchanges (e.g. NYSE, Nasdaq) on the OTC Bulletin Board.

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