Buy low and sell high is the ultimate winning strategy in the stock market. But some investors take this literally and buy very low-priced stocks. Also known as penny stocks, these scrips are not necessarily good investments. Since the market cap is low, they are easily manipulated by operators who lure unsuspecting investors and dump worthless shares on them. They first create a buzz around a stock, indulge in circular trading to push up the price, and then nudge investors to buy at high prices.

Penny stock are the stock with low price that it will attract the immature trader in the stock market for investment.