How to Buy Penny Stocks Online

Penny stocks are stocks that cost less than $5 to buy and sell. These stocks are available online through discount stockbrokers. The advantage of penny stocks is that they have lower prices than regular stocks, making it easy to own many of them. Buying penny stocks through online discount stockbrokers isn't difficult, but it can be risky.

Difficulty: Easy

Instructions

1. Speak to several online discount stockbrokers like Scottrade and E*TRADE. Visit their websites to determine their fees, commissions and reliability of their services. Once you find one you're comfortable with, open a trading account with the stockbroker.

2. Fund your trading account with the online stockbroker. You can do this through checks, wire transfers and bank-to-bank money transfers.

3. Research penny stocks online through forums, bulletin boards, newsletters and news sites. Discussion forums at Zecco, Superior Investor and Online Traders Forum have good research tools for online penny stock traders. Ask your online stockbroker for recommendations.

4. Select the penny stocks to buy. Enter the stock's trading symbol in your stockbroker's online trading platform and buy the stock.

5. Monitor the stock daily through your stockbroker. Sell quickly when the stock price moves up to lock in your profit or when it moves down to limit your loss.

Tips & Warnings

• Research penny stocks thoroughly before buying them. Research the company behind the stock and understand their business and management.
• Monitor the price of penny stocks in your portfolio several times a day. These stocks can fall in price very rapidly and you can take a huge loss unless you're vigilant.
• Be careful about penny stocks recommendations you receive through email messages or individuals online that you do not know. You can be defrauded that way.