Blue chip vs penny stocks

by John Smith Stock Market Investor

The stocks of large and big enterprises are usually considered as Blue-chip stocks. In Poker, Blue chips are the most expensive chips; likewise, in a stock market, blue-chip stocks are the most valuable stocks in the market with the attitude of ‘buy it and forget it’ for at least five years to ten years. Blue chips stocks are the ones that generally have a market capitalization of over $10 billion on the stock exchanges. On the other hand, Penny stocks are the ones that are typically priced less than $1 with a low market capitalization varying between $50 million and $300 million.

Penny stocks are more volatile than Blue-chip stocks. It means that a Penny stock can witness a lot of variation in its price in a day’s trade. As there is a lot of sudden movement in the Penny stocks prices, many investors try to take advantage of this opportunity to make quick money. However, there is an equal chance of losing money while trading in Penny Stocks. Penny stock’ investors don’t hold these stocks for a longer duration.