How do penny stocks differ from blue chip stocks?

Penny stocks are characterized by their low price, typically trading at $5 or less, and they often belong to smaller companies that are not listed on major exchanges like the NYSE or NASDAQ. These stocks attract investors looking for potentially high returns, as they can be more volatile and speculative in nature. The aspect of being "unlisted" also means that penny stocks are frequently traded on the over-the-counter (OTC) market rather than formal exchanges, which can limit their regulation and increase risks for investors.

The distinction between penny stocks and blue chip stocks highlights the differences in investment profiles; blue chip stocks are well-established companies with a long track record of reliability, stability, higher market capitalization, and consistent dividend payments. Understanding these characteristics aids investors in making informed decisions based on their risk tolerance and investment goals.