Penny stocks are inexpensive stocks that sell for five dollars or less. These stocks are made available by new companies, most usually as an attempt to generate capital. As with any new venture, the success of these businesses are often unpredictable. However, several of these small businesses will one day grow into financial empires.
Many people believe that penny stocks are nothing more than child's play in the world of investments. The opinion of the majority seems to be that with such a little investment expecting any real return would be unrealistic. An even larger majority believe that investing in the stock market at all during such a turbulent time is unwise.
This write agrees that there is some risks involved in any investment, including penny stocks. There's no denying that. However, I do not agree that this is no time to invest. Not only is now a great time to invest in penny stocks, they can be very profitable.
With the stock market being at an all-time low there is no better time to invest in penny stocks. The likelihood of the stock market going lower is slim. It's like the old saying goes, "There's no where to go but up from here!" I think that applies nicely to this situation.
How To Buy Penny Stocks Online
Penny stocks are most often purchased online.
Research penny stocks. This is a bit daunting as there is not a lot of easily found information out there regarding penny stocks. By searching out SEC filings online you can find different companies and decide which companies you may be interested in.
Contact a reputable online stock broker. These online stock brokers are often referred to as discount brokers or discount stock brokers. Some of the more popular online brokers are Scottrade, Options Express and Etrade (or E*TRADE). By visiting the websites of online stock brokers you can evaluate their fees, services and get a feel for how they do business.
Once you have found an online broker that you are comfortable dealing with, open up a trading account with your stock broker. Remember to set a limit. A main factor that people like about penny stocks is these are investments that you can make with a small amount of money. Keep that in mind and don't exhaust your finances by playing the stock market game. Set a firm and reasonable limit and stick to it.
You'll need to decide how you would like to supply financial funds to your stock broker. You can do this easily by doing online money transfers, bank transfers or wires, checks, money orders and even cash. You could possibly be limited in the ways you are able to provide funding to your trading account depending upon your bank or financial institutions policies as well as the preferred methods of your broker.
While your online broker may guide you well it is a good idea to research the penny stocks you have interest in. By participating in online financial forums and listening to what other investors are saying and doing you will soon get a feel for what is and what is not good investment ideas.
Online Traders forum, Zecco discussion forums and Superior Investors are all excellent resources. You'll find tools here to help you make informed and capable decisions. Far too often, online penny stock traders overlook these treasures of information.
It is also a good idea to ask your stock broker for advice on ways to research your stock trading options.
Invest! You will do this by entering the chosen stock's trading symbol into the stock broker's online trading platform. Now, you buy the penny stock of your choice.
When dealing with penny stocks most people prefer to buy several. The usual method is to only invest a small amount into each individual penny stock. Diversifying your investments reduces the risk of financial loss.
Monitor your penny stocks closely. When dealing with the stock market you'll soon notice that the prices of stocks can rise and drop in a short amount of time. Because of this it's a grand idea to check up on your investments several times a day.
Most people sell their penny stocks when there is any significant increase. This will allow you to lock in that profit. When your penny stocks have a significant drop you can also sell. Mind you, If the market is exceptionally low when you bought this isn't a massive problem and you may be wise to hold onto those stocks. There is a good chance they will gain, putting you back on track and maybe even ahead.
Tips For The Penny Stock Trader:
**A wise investor knows his or her limits. Set your limit and honor it.
**Options Express and ETRADE have an excellent tool that will help you learn the ins and outs of online investing. By offering a game-like atmosphere, you can "pretend trade." You are given fake money and allowed to make fake trades. This truly is more than a game and you should certainly try this before investing your real, hard earned money!
**Research is key. Don't be afraid to call up the company that you want to invest in and ask questions. Request financial reports from them. If you're unable to get the information that you need to feel comfortable, don't invest in the companies penny stocks.
**Use caution when obtaining investment advice from online sources. Make sure it's reputable advice!
**Any investment or trading tips that are received in emails should be ignored. These emails are usually scams and can cost you a great deal of money.
**Keep in mind that all the billion dollar companies out there did not reach that type of financial success overnight. They were once small companies just like the ones offering penny stocks you will be investing in. These smaller, ground level businesses may one day be a giant like Microsoft one day, and investment savvy you had the intuition to buy stock!