Penny stocks fall under the category of micro-cap or nano-cap. The distinction has to do with the public consensus concerning the value of each share. This is referred to as market capitalization.

Determining the market capitalization or cap of a company can be complicated. The formula used includes the price per share times the shares outstanding, which includes those available for sale and those held by shareholders, but not those held by the corporation.

One of the things to watch for when you are first getting into day trading or other kinds of investing is changes in the company’s market cap. These changes can reflect problems within the company.

Micro-cap and nano-cap stocks are not listed on the major stock exchanges. You can find the current price per share on the OTC Bulletin Board list or the Pink Sheets.

Micro-cap and some nano-cap stocks have become popular in recent years for daytrading. Internet forums concerning the small-cap market have contributed to the popularity.

You can learn a lot about this kind of investing on the internet. Just be cautious when brokers seem to be running a promotion or marketing campaign concerning specific pennystocks. Always do your own research. If you get tips, try to confirm them with a second source. There are still plenty of scammers out there.

Micro-cap shares typically have a market cap of less than US $300 million. Nano-caps are worth less than $50 million. The price per share may be less than a penny or as much as $5.

You can find prices on some of the really good pennystocks on the NASDAQ Small Cap. Another source for information on US micro-caps is the Canadian Toronto Venture Exchange. In London, you can look to the Alternative Investment Market or AIM.

You can always contact a broker to make a purchase. Some brokers specialize in the smaller OTC markets.

Finding a price per share or a place to buy is usually easier than trying to find advice about buying good pennystocks. It is a volatile market and it’s risky. But, the returns are high, which makes this kind of investing attractive to many people.

In the years since 2000, many investors have found that their small cap portfolio outperformed their shares held in larger companies in terms of ROI (return on investment). The total dollar value earned was lower, but the profit percentage was higher.

As a result, new indexes have been created for tracking the performance of penny stocks and small stock assets. Now, you can consult the Russell, the Dow Jones Select or the Dow Jones Wilshire US micro-cap indexes.

2002 regulations concerning what is required to list a company on the US exchanges have made the AIM and the OTCBB more popular for new companies and even established ones. There are good deals to be found in this market.

Investing in penny stocks could make you wealthy quickly if you choose the right companies. Just remember to do your research.

Penny stock investing can be very profitable. There are many opportunities in penny stocks. However, trading penny stocks can also be very risky and might not be appropriate for everyone. You need to do your research and understand if penny stock trading is right for you.

Author Bio: Ingvar is the author of finance articles and operates several finance and investing websites. For more information see: http://www.buypennystocks.ca