Penny stock is a term that originated in the US markets and was used to describe stocks whose prices were just a few pennies. Typically penny stocks have low market capitalisation, share prices, and liquidity.
Due to the small size of penny stock companies and their low share prices, some might think penny stocks have the potential to give high returns in short periods, but it should be noted that penny stocks tend to be risky due to low liquidity and the small size of the companies.
