How to Purchase Penny Stocks Online

Purchasing penny stocks online can be very profitable but confusing. This article will guide you through the process of buying penny stocks online.

Difficulty: Moderately Challenging

Instructions

Instructions On Purchasing Penny Stocks Online

1. Get information on penny stocks to buy. Information on penny stocks may be scarce. Try contacting a broker to get a prospectus to find more information on companies with penny stocks. Look online on SEC filings on the companies you are interested in.

2. Call and talk to the company directly and to get the financial statements. You may also be able to talk to someone who is most knowledgeable about the company.

3. Open a brokerage account to buy penny stocks. There are a lot of online brokers you can choose from with low commission rates.

4. Invest only a small amount into each penny stock and diversify among several to reduce the risk.

5. Use a limit order when pacing a trade for a penny stock. Penny stocks are often very thinly traded and the price you get may vary greatly. Using a limit order reduces the risk of a big price change when you place an order.

Tips & Warnings

• Understand the risks of penny stock. Penny stocks are high risk investments with often little information and very little liquidity. Trade penny stocks only with money you can afford to lose.
• Beware of high pressure sales tactics from brokers. There are a lot of online scams with penny stocks.

Resources

• SEC Filing Information
• Etrade Online Broker
• Charles Schwab Broker