Day Trading Penny Stocks

Penny stock investing is considered a high risk because companies that sell speculative securities are not subject to the same regulations as companies who are listed on a major exchange. Speculative securities are mainly listed on Pink Sheets. The Pink Sheets are largely for companies who have financial difficulties and do not use an outside auditing company to scrutinize financial statements. Because a company does not have to prove financial health it is much easier for the numbers on financial statements to be bogus. Speculative securities are priced based upon the market as a whole which means that the price is not a true representation of a company's value.The downsize to trading the same shares on the same day is that prices do not fluctuate much in one day's time so making a sizeable profit is unlikely.