Volatility should be the favorite play for those who choose to trade in Penny Stocks. Penny stocks, which are stocks traded under $5, are usually of small companies which have a low trading frequency. As an investor, you will see fewer buyers of penny stocks in the market which makes it low on liquidity. As a result, you might face difficulty selling penny stocks at a price that aligns with the market price. Therefore, penny stocks can make you large amounts of profits but there is an equal amount of risk involved of you losing a huge amount of your investment in a short period.