Investing in penny stocks and low-priced shares has several advantages, but they aren't for everyone. A small investment can grow quickly into a substantial sum of money, but they can also quickly deplete its value. These risks often outweigh the rewards for many people. Therefore, they don't need to feel bad about abandoning the idea. In most cases, that is the best course of action, since most penny stock situations end in losses for investors. The good news is that penny stock trading does not result in the kind of catastrophic losses that some investors suffer. Many investors lose money by investing in the wrong stocks and/or at the wrong prices, and then holding onto those stocks for too long. In contrast, most investors who purchase penny stocks on the OTC markets will lose money. The other option is to invest in well-known companies that are traded on regulated, major US stock exchanges. Companies with well-established business models make up the vast majority of those listed. Companies in financial difficulty are more likely to have penny stocks or shares that trade for less than $5 per share. Investors are expressing their doubts about the company's future by raising the price of its stock. Stock prices would be higher if investors did not harbor such concerns. Companies that are publicly traded in the United States have likely been thoroughly vetted and have provided adequate financial disclosures to earn the right to trade on major U.S. exchange platforms. Having this status indicates that they are in a better financial position, have access to resources and market knowledge, and have a chance to improve their business situation. To be a successful penny stock investor, one must look for signs of a company's reversal.