I trade penny stocks. The key word here is "trade" and not "invest". You can't invest longer than a few days in penny stocks and think you will ever make a cent. I actually prefer holding for less than 1 hour when possible. The penny stock market is setup in a way so that all the fools that put up a few hundred or a thousand dollars will lose all of their money very quickly and the fools that take out a second mortgage for $300k to buy XYZ penny stock will end up living at a homeless shelter soon after. On top of this out of the 25000 or so OTCBB and Pinksheet penny stock companies there's only 1-2 at any given time that anyone would want to be involved in. The rest you must completely ignore. The reason is the penny stock market is very illiquid. This means you can't get in or out when you need to and it's also highly manipulated by the key market players. Its not like buying AAPL or BAC stock where you can just press the button and buy or sell 1 million shares instantly. In the penny stock market you have to trade the high volume stocks that are in play and be out of them quickly before they become out of play and go to the penny stock grave yard.
The penny stock market is characterized by pump and dumps in the form of stock promotions and dillutive financing. Although all penny stock companies claim to have some unique product or are close to developing a cure for cancer, its all bogus. These companies have no earnings and no prospect of every earning a profit. A lot of times they are outright frauds like in the movie boiler room. They are just a registered entity known as "a shell", and they are used to steal money, err I mean raise funds from unsuspecting investors. Shells have no operations. The name can be changed to anything the management wants and the companies can say they are in a exploratory stage for any type of business. This is the penny stock market that the general public has no knowledge of. I trade chart patterns that form in this market over and over again, and I am able to pull money out over and over because history repeats itself and there's so many uninformed people involved in this market, which cause the patterns. Many are gamblers or just investing for entertainment... I am not sure why someone wants to just throw away there money because that is essentially what a person is doing when they get involved in the penny stock market and do not know how the game is played.