Penny Stock

Historically, a penny stock has been viewed as a stock that trades below $5 in an over-the-counter (OTC) market. However, interest in penny stock trading has grown over time, and many retail traders consider penny stocks as those which trade under $1. Large brokers and financial institutions often don’t trade stocks below $5, though some have a lower threshold. Many restrict their brokers and employees from trading (on behalf of the firm or personally) in stocks below a certain price point. The contemporary view has evolved as more stocks trade under $1 on major exchanges like the New York Stock Exchange and NASDAQ. These exchanges have listing restrictions, including a minimum bid price of $1 for listing maintenance. However, lengthy delisting processes allow for months or years of trading on such stocks near or below $1.