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A penny stock is the share of a listed company that is not doing too well. As a result, such a share trades at very low prices, often below its face value. Such shares are also thinly traded in the market due to their unpopularity. Penny stocks are dangerous to buy, since prices there can be notoriously unpredictable and even manipulated by promoters or brokers. Investors should steer clear of penny stocks and stick to more reputed companies with large traded volumes of shares.