They certainly are a risky investment but supposing someone wants to risk it all anyway hoping that they might profit from trading penny stocks, how quickly should they [this person interested in profiting from trading penny stocks] sell [that's assuming that the penny stocks trade in huge volumes making it possible to sell any time]? The moment there is a price fluctuation no matter how small it is?
You'd probably be better off at a casino or racetrack. Not for me. Probably it would wind up as short term trading, encountering commissions and high tax rates (if you happen to be lucky enough make a profit.) YMMV.
I generally sell at least some of a stock when fundamentals dictate it - when it is no longer so cheap or growing so rapidly, when there is a significant material change in the company or its products or services, or when the stock price jumps up double digits or more overnight. If there was no such fundamental reason to buy it in the first place, I would not have bought it (regardless of sticker price). Also, a "sell" for me does not necessarily mean "sell all" or even a majority of the stock. And if I do sell it all, it certainly doesn't necessarily mean I will short the stock just because I sold out of it.
If you are talking about good old-fashioned proper penny stocks then I would sell as soon as I hit whatever profit target I had in mind. Penny stocks aren't a space I would personally want to keep much money in for too long, particularly as transparency isn't something that part of the market is about. The more speculative the game I'm playing, the more eager I am to cash out. You may get quick fast returns occasionally with penny stocks. The other side of the coin is the sharp losses.
Point being for me is that I don't buy a stock on the basis of it's sticker price in the first place. Whether it's 88 cents or 8800 bucks a share doesn't determine whether or not I'll buy it, and it certainly doesn't determine whether or not it's "cheap". The only qualifier for this is that I buy less of stocks trading below $10 a share, and buy stocks VERY lightly if they're trading below $1 a share. Otherwise, it's basically the same - fundamentals.
