Penny stocks is a risky investment strategy. One of the reasons is that companies dealing with them are not required to file with the Security Exchange Commission. The information available is not from credible sources. Another risk is that they don't have a minimum standard to remain at the stock exchange like regular shares. Many pennystock companies are either on the verge of bankruptcy or new and with poor or no track records. Pennystocks don't have much liquidity and it is hard to find a buyer for a particular stock. Therefore, investors resort to sell them at very low prices.