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Penny stocks are the stocks that trade below $5. But the definition is rather not so far better because some people thought penny stocks are basically low-priced stocks that sell below $1. However, we can use this term as the stocks that can be trade at a lower rate.

Penny stocks are common shares of small public companies that trade at less than $1.00.[1] In some countries, similar shares of stock are known as cent stocks. Penny stocks usually do not trade on the major stock exchanges such as the NASDAQ and the New York Stock Exchange (NYSE) because they typically can not qualify for the strict listing requirements.