How to Purchase Penny Stocks
Penny stocks are stocks that trade for $5 or less. These stocks are traded mostly in the Over The Counter Bulletin Board (OTC-BB) stock exchange instead of the New York Stock Exchange (NYSE), The NASDAQ Stock Exchange or the American Stock Exchange (AMEX). Because of the low price and low quality of penny stocks, their prices often fluctuate wildly during trading. They carry greater risk than regular stocks and are issued by companies with limited capitalization. Here is how to purchase penny stocks.
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Instructions
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Log on to the internet and research penny stocks. Visit forums that cover penny stocks. Subscribe to newsletters and magazines geared towards low-priced stocks. See Resources below. Understand the risks associated with trading penny stocks and the return on investment (ROI) of such stocks. Select a few penny stocks, follow their buy and sell actions on the stock exchange for a few days. This will tell you what to expect when you begin trading in the stocks.
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Research stock brokerage houses and select a stockbroker for your stock trades. Full-service stockbrokers charge high fees and may not be suitable for penny stocks. Discount stockbrokers offer low-priced services but no support. Check factors like execution fees, monthly or annual fees, inactivity fees, low minimum balance and discounts. Contact your local bank to see if they offer brokerage services on penny stocks.
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Open and fund your trading account when you settle on a stockbroker. Most stockbrokers will allow you to fund your account through bank-to-bank deposits, wire transfers, money orders or personal checks. Check with the stockbroker of your choice for their funding options. Confirm their fund withdrawal options before opening an account. You want to be able to withdraw your funds easily should you make a profit.
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Research penny stocks online and place your buy order through your stockbroker. Log onto your stockbroker’s trading platform and following their instructions, place your buy orders when you are ready.
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Tips & Warnings
Penny stocks are highly volatile. Don’t buy them unless you have done thorough research.
Before opening a trading account with any stockbroker, confirm that you can trade penny stocks using their platform. Some stockbrokers prohibit penny stock trades and they don’t usually tell you upfront.
Resources
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Comments
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rarebear
Sep 18, 2009
So much for my speed reading. I said to myself " Now who would want to buy penny socks ?"
