Penny stocks (often sold for $5 or under a share) may sound simple but they can become a high-risk investment if a trader is not experienced in trading over the counter. Penny stocks have a lack of liquidity or ready buyers in the marketplace due to the nature of the company and the small size of the shares. These stocks are known as speculative and if you overinvest in them, you stand to lose your investment, which makes them a potentially risky venture.