What external factors impact the penny stock markets?
All of the same driving factors that influence the broader exchanges (like government policy, interest rate moves, the price of oil, political uncertainty…) also have an effect on penny stocks. The difference is that smaller penny stock companies usually feel the effects to a magnified extent, because it doesn’t take much trading volume to throw the stock around. One external factor that impacts penny stocks specifically, beyond those touched on above, include social perceptions towards the risk/reward ratio of these speculative investments. When traders are reminded by the media that Microsoft used to be a penny stock (which it never was, by the way – that’s a common misunderstanding), they are reminded of the potential gains, and flock towards penny stocks to take their chance. When they hear of an old widow milked out of her life’s savings by some hustler, they withdraw from the penny stock scene. In general, as a bull market progresses and stocks perform better and better, more i
