Let's begin by talking about what a daytrader really is. Basically it's a stock market player who buys and sells stocks quickly. In fact, the quicker the better if you day trade penny stocks. By doing research on the internet, TV business news, newspapers, and many other places, they find the stocks they want to invest in. They buy a ton of shares quickly and watch for even minimal gains. If they do it right, they get out whenever there's a gain which nets them a profit that depends on the number of shares they traded.

Knowing what a penny stock is won't hurt, either. Although it sounds like it should be a stock that sells for a penny a share, that's not exactly accurate. Penny stocks are those that sell for under five dollars a share.

The trading in penny stocks has sky-rocketed during the last decade and a half. The day trade bible, the Over-the-Counter Bulletin Board (OTCBB) traded just over 3 billion shares in 1994. That was about 4.5% of the number of stocks traded on NASDAQ and the NYSE. By 2003, though, the OTCBB numbers had gone up a total of 8900%. In less than a decade their volume had increased to 267.4 billion shares. That was an increase that amounted to 63% when compared to NASDAQ and 78% of the NYSE. Can you believe it?