How to Buy Penny Stocks from the USA
Penny stocks can be attractive because they require a relatively small investment--typically $5 or less. Penny stocks can have huge growth potential, but with that comes heavy risk to your capital. Thorough research, patience and tolerance for volatile price swings can pay big dividends in an investment in penny stocks.
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Instructions
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Open an account with a stock broker. There are two general classifications of brokers--full-service or discount. Full-service brokers offer investment advice and charge higher commissions. Discount brokers only follow your investment instructions without offering advice and charge lower commissions. Most online brokers are discount brokers--they may offer some research tools for you to use but they will not give investment advice.
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Fund your account. Typically, you can do this through an electronic money transfer or by mailing a check to the brokerage. It generally will take a couple of days for the transaction to be completed.
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Determine which U.S. penny stocks you want to invest in. Before plunging into a penny stock, check out what financial experts are saying about it and study the company's recent financial statements. Check Money magazine, The Wall Street Journal and other business publications for ideas. If you've opened an account with a full-service broker, ask him for advice.
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Place an order for your stock through your broker. You can order a stock at market value, which means your stock will be purchased immediately. Or you could make a limit order, in which your purchase will be made when the price of the stock hits or falls below a limit that you set. For instance, if you place a limit order at 35 cents for a penny stock currently trading for 38 cents, your order will not be placed until the stock price falls to 35 cents or less.
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Tips & Warnings
Don't fall victim to penny-stock scams. Scammers have circulated bogus penny-stock investment tips through emails and faxes for years in attempts to create a market for a stock and artificially inflate its price. If you get a suspect email, don't respond to it or provide any personal information to the sender. And don't try to invest in the stock. Invest only in penny stocks that you have researched through trusted sources.
