Penny stocks are traded on over-the-counter markets through the use of electronic quotation systems called "pink sheets." Penny stocks are higher risk inexpensive stocks that trade for less than $5.In addition to the high risk/high rewards factor, there is something else for traders to consider. Getting your hands on relevant information about the company's operation is one of the most important things traders can do. In the United States, both the SEC and FINRA have specific rules to define and regulate the sale of penny stocks.In the current market, penny stocks are gaining popularity and traders of all ages and skill levels are purchasing penny stocks. When trading prudently, one could make huge profits by trading fundamentally strong penny stocks.