| Even if you are new to investing money in the stock | | | | company to company. But generally speaking if the |
| market you will probably have heard of small cap | | | | market cap is less than about $250 million, this will |
| stocks and penny stocks. Now since most people | | | | point to a small cap stock. |
| would rightly point out that both of these are | | | | So you can see that a small cap stock refers to the |
| extremely volatile and could result in you losing your | | | | market capitalization of a company, while a penny |
| investment, you might assume they are exactly the | | | | stock refers to the actual price of each individual |
| same. | | | | share. While it is important to recognize the |
| But while they do identify a particular section of the | | | | meanings of these terms, you also need to |
| stock market, there are differences between the | | | | remember that the exact definitions will vary |
| two terms. And it is vital that you understand what | | | | depending on which website you go to. So in some |
| they are before you actually invest in them. | | | | cases what you see as a small cap stock on one site |
| So let us look at the definition of each one as it | | | | will actually be deemed to be a mid cap stock by |
| stands. For starters a penny stock is a stock that is | | | | someone else. |
| valued at a small amount. This is typically less than a | | | | In a sense then being able to identify a particular |
| dollar a share, but it could be anything up to around | | | | stock as conforming to these guidelines is not the |
| five dollars a share so bear this in mind. | | | | most important thing. The most important thing is |
| When it comes to small cap stocks they fall into the | | | | doing your research on each one before you decide |
| same category as penny shares in that they belong | | | | whether to buy into that particular penny stock or |
| to small companies. They are also liable to be priced | | | | small cap stock as a result. |
| very low to reflect the fact that the companies are | | | | And don’t forget that both of these can be high |
| small ones. But these stocks have a lot to do with | | | | risk investments. If you prefer safety they may |
| market capitalization. You will find that the figures | | | | not be for you. |
| you see will vary from website to website and | | | | |