There are different rules to penny stock trading and dramatically different approaches. While traditional stock trading methods will not work, you can learn how to successfully trade penny stocks and make a reasonable amount of profit in the process.
The vast majority of penny stocks originate from untested small companies that don't have any past performance to accurately judge their performance on the market. As a result, most penny stocks are traded over-the-counter (OTC) on either the OTC Markets Group or OTC Bulletin Board.
One primary concern surrounding penny stocks on the OTC is fraud since these markets are not tightly regulated. Although infrequent, penny stock companies can result from clever marketing campaigns designed to supplement clever pump and dump schemes.