Online Penny Stock TradingOnline Penny Stock Trading

Online penny stock trading is something you may have heard about, but may not fully understand. Online penny stock trading is intriguing because you can invest for a very small amount of money and purchase a large number of shares from a wide variety of companies. The fact that you can do this all from the internet makes it even more appealing - after all, wouldn't it be great to make millions while you're still wearing your pajamas?

What Are Penny Stocks?

They are sometimes referred to as "microcap stocks" or "nano stocks." They are basically securities that you can purchase for under $5 (generally). Online penny stock trading involves purchasing these on the internet through discount stockbrokers.

Where Can I Purchase Them?

Once you're ready to begin online penny stock trading, you should begin by exploring some of the big players in the market. This includes E*TRADE and Scottrade. Both of these sites will allow you to perform transactions for much less than a typical brick and mortar broker would charge. Furthermore, both services provide great tools that allow you to manage your portfolio and make more informed decisions with respect to your online penny stock trading.

How Do I Know Which Ones To Buy?

Online penny stock trading isn't easy, mainly because you're looking at companies who are relatively unknown. Fortunately, there are a lot of resources available on the internet that allow you to see which companies other people favor. One great forum to explore is Zecco. Warning: Always maintain your skepticism, because you never know when people are trying to scam you, or are simply trying to generate hype for their own investments. At the very least, you should perform a Google search on any company for which you plan to purchase shares. Don't be afraid to form your own opinions about a company's prospects and chances for success.

Is This Risky?

As you would probably guess, online penny stock trading can be very risky. The one thing you must always keep in mind with respect to investing is this: Risk and reward are almost always positively correlated. The more risk you take on, the higher your potential for reward is. Likewise, if you're considering an investment with a potentially high reward (like the returns involved with online penny stock trading), you're most likely facing high risk. The good thing is, depending on how many shares you purchase, you generally won't be spending much money per share. If you can diversify your investments, you can afford to not have every investment be a "winner."

Go ahead, give online penny stock trading a try! Be cautious, skeptical, and think through each of your decisions. By keeping these tips in mind, you can minimize the amount of risk that you're up against.