How to Invest in Penny Stocks on the Stock Market
The idea of buying hundreds of shares of stock for less than $1,000 is certainly appealing, and penny stocks make it possible to do just that. A large number of stocks trade for less than $1 per share, and many more sell for less than $5 or $10 per share. Although these stocks can be quite risky, they can be quite rewarding as well.
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Instructions
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Decide how much of your investment portfolio you want to dedicate to buying penny stocks. These low-price stocks can be very risky, so it is a good idea to limit your exposure to this segment of the market.
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Pick up a copy of a financial publication such as The Wall Street Journal or Investor's Business Daily and turn to the stock tables. Most penny stocks trade on the over-the-counter, or OTC, market, but some also trade on the major exchanges.
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Log on to your brokerage account. Open a brokerage account if you do not have one already set up. Choosing a low-cost Internet broker will reduce your commissions and let you put more of your money to work.
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Use the stock screening tools on the broker's website to identify stocks selling for less than $1 a share. Investors might want to consider stocks selling for less than $5 or $10 as well.
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Go to the trading menu on the broker's website and enter the ticker symbol of the stock you plan to purchase. Enter the number of shares you plan to purchase. Verify your information and submit your order.
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Watch the prices of your penny stocks closely. These stocks tend to be very volatile, and you might be able to book a quick profit by watching for spikes in the share price.
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References
- Photo Credit Pennies on the Dollar - bill & pennies on a white background. image by Andy Dean from Fotolia.com
