Buying Dirt Cheap Stocks
If you want to build up a huge portfolio of cheap stocks there's one way to do it, buy dirt cheap stocks at a discount broker. You can find what are called "penny stocks" for sale on both the major exchanges and on what brokers call the OTCBB (over the counter bulletin board). This network of stocks features companies that have share prices as low as 1 cent or even a tenth of a cent.
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Instructions
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Open an account at a discount brokerage like ScotTrade.com, or Etrade.com (see Resources). If you have an account at Fidelity or another major brokerage you can also buy dirt cheap stocks if you trade often. For those making so many trades in a quarter, the price for each trade goes down. Trade more to enjoy lower commission fees.
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Visit OTCBB.com, the web home of the OTCBB (see Resources). Here you will find a list of the cheapest stocks that are being bought and sold for mere pennies per share.
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Do your due diligence on these stocks. Most are being traded for pennies for a reason. You might find some gems and some real bargains. Companies that are about to make big discoveries in biotechnology, or exploring areas with rich energy reserves. The more you research, the more you will find with promise.
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Type the stock symbols into a portfolio spreadsheet and track them on Yahoo Finance, MarketBrowser or another stock portfolio software program. Follow the price of these shares and find a good opportunity to buy.
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Search for the stock symbols on your broker's website. Then set a market order, or limit order to buy large numbers of shares. A limit order allows you to purchase only when the stock sinks to a certain price level. A market order will guarantee that your order is executed at the first available opportunity.
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Continue to follow these OTCBB stocks and add more to your portfolio tracker. Buy them when opportunities become available.
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Tips & Warnings
Buying after a lull following a price run-up is one strategy some penny stock traders employ. The price run-up shows that there is some interest in the stock, possibly news about a new discovery or a buy out rumor. The price drop following this run up is usually caused by profit taking, those who have held shares for a long time and want to take their profits now. Another price spike is sometimes thought to be right around the corner.
Buying cheap stocks can promise big gains, because a stock that is trading at only a penny, will double your investment if it just rises in value by one cent. Often these stocks triple or quadruple in value in less than a few days; however, they can drop in value too, and many times these stocks never appreciate in value at all.
