The world of penny stocks is full of hype, scams, manipulative traders, high fees, and uncertainty.  What in that picture sounds like a good idea for making money?   The allure comes from the ultra low share prices and the dream of them just becoming normal share prices.  This is glorified gambling for the standard investor.  The trades speak of the volatility.  However, for most traders volatility is just unneeded risk.  Most professionals are looking for liquidity and clear trends.  Hot penny stocks provide neither. 

If you want to find the volatility of the penny stocks you can certainly trade options or exchange traded funds that move two or three times the price of the underlying fund.  You can even trade the VIX which is exchange traded fund that mimics the volatility of the market.  If you like volatility you can trade it itself.

If you are interested in big percentage changes there isn’t anything that can move in price like a highly leveraged FOREX or out of money option.  Only here you have analyst and economist data that matters and a much bigger market to manipulate.  Though there is still speculation that options move at expiration on price forcing (max pain theory) and banks can affect currencies on the short term.

The last reason people invest in penny stocks is to find the next big company.  Well you don’t have to go that small to find a company that is unknown.  There are thousands of companies on the major exchanges, many of which are worth more than a few hundred million which is small today.  They can increase in size 1000 times before they are even considered large.

Penny stocks just don’t have the money making potential that is available in the highly regulated markets.  While there are actions being taken in the market to tie up the loose ends of penny stocks they just haven’t hit a level that I feel they are worth the risk.