How To Buy Penny Stocks

You need to know how to buy penny stocks. Don’t worry, we’ve all been there. I’m going to assume you know what a penny stock is, but if you don’t, take a quick look at our homepage for a description.

Penny stocks can be traded on various stock exchanges, including the National Association of Securities Dealers (NASDAQ), AMEX (part of NYSE), New York Stock Exchange (NYSE), Over the Counter (OTC) and Pink Sheets. All of these exchanges have different rules for listings. Your better penny stocks will be listed on NASDAQ, AMEX or the NYSE. After that, the OTC BB.

When you get into the Pink Sheets, it’s really the Wild West because “pinks” don’t conform to stricter Securities and Exchange Commission (SEC) rules like other companies listed on other stock exchanges. We recommend you stay away from penny stocks listed on the Pink Sheets. There are plenty of opportunities elsewhere.

How To Buy Penny Stocks

Actually, buying penny stocks is exactly the same as buying any other type of stock. So if you already know how to do that, you know how to buy penny stocks. If not, don’t worry. I’ll proceed with showing you how to buy penny stocks properly.

Here’s the general checklist for buying penny stocks online.

1. Get capital for penny stocks trading and investing. We recommend you have at least $500. Yes, you can start with less, but it’s slow going.

2. Find a good online penny stocks broker. We don’t recommend looking for a full-service brokerage for penny stock trading. You’ll get hammered with fees. You want a discount brokerage. More specifically, you want a good broker for penny stocks. That link has more information about who to look at choosing.

3. Setup an account with your online penny stocks broker. Some penny stock brokers have minimum deposits and some don’t. Capital aside, just choose the best broker for your penny stocks trading plan.

4. Begin researching to find hot penny stock picks. Always do proper penny stocks research before jumping into bed with anything. Don’t just jump into something because you saw someone saying the best penny stocks to buy are X, Y and Z. Investing in penny stocks is highly rewarding, but caution is needed.

5. Execute penny stock trades once you understand how to buy penny stocks.

That’s the general overview. Now let’s look at a few more specifics about how to actually buy penny stocks.

How To Buy Penny Stocks Example

Okay, you’re all set with your online broker and money is in the account. It’s now time to buy a penny stock.

Each stock has its own symbol. For example, the symbol for Google is GOOG. You need this symbol to buy penny stocks. Your broker’s trading interface will make this very easy, so don’t worry if it sounds confusing.

Once you have the company in mind, the next decision is how many shares of the penny stock you want to buy. For our example, I’m buying 100 shares of a fictional company.

Here’s a key penny stocks trading tip for you. Never do a market order. When you buy and sell penny stocks, you want to do what’s called a limit order.

How To Buy Penny Stocks: Orders

Market order: You’re saying I’d like to buy or sell my penny stock and I’ll take whatever price you want to give me.

Limit order: You’re saying I’m buying or selling my penny stock for $X or better, no less.

As you can see, a limit order gives you more predictibility and command over your trades.

You can also select “All or None.” When you choose that option, you’re saying that unless you can buy or sell all of your desired shares, you don’t want to do the transaction.

Next, you can choose the penny stock order’s duration. For example, you could enter the order for just today at market close or just keep it opened until it’s filled.

Penny stocks always have two prices: bid and ask. The bid price is what people are buying the stock at currently. And the ask price is what people are willing to pay currently. The difference between the two is called “the spread.” Stocks with bad spreads can kill a penny stocks trader in a hurry.

Let’s say you see stock for PSCOMP, Inc (fictional company) with a bid price of $1 and an ask price of $1.10. This means that if you buy the stock right now, you’d pay $1.10 per share. And the spread is 10 cents, so if you instantly sold it back, you’d lose 10 cents per share since people are only willing to pay $1 per share. In order for you to break even (not taking broker fees into account), the stock’s bid price must go up 10 cents to $1.10 (so a 10% increase). See why the bid/ask spread is important?

When you’re just starting out with penny stocks investing and trading, start small to get your feet wet. You’ll make mistakes. It’s part of learning how to buy penny stocks. Just keep at it, read and research.

Now you know how to buy penny stocks.

Online Penny Stock Brokers

The financial industry can be tough to navigate and sorting through the waves of online penny stock brokers is just on part of the puzzle. I know one guaranteed way to lose money in the stock market—pick the wrong broker. Flashy ads and steak sizzle aside, they are not even close to being all equal. And when you’re trading penny stocks, your online stock broker selection is all the more critical. Read more

Penny Stocks Research Tips

I’m always amazed at the stories I hear of traders dumping money into a stock without any penny stocks research at all. That’s a quick ticket to the poor house, especially if you’re risking capital you can’t afford to lose (see: Online Penny Stock Trading ).

Funny, these traders will sift through Google.com looking for reviews for a $10 product or for the latest hot penny stocks from some site, but will gladly dump thousands into a stock on a whim. Don’t be that trader. Penny stocks research is vital to your success. Treat your investments like you do your life.

I’m not saying you need to have the home number for the CEO before you make a play, but you do need to be prepared if you want to find the best penny stocks. Start with good sites. Create bookmark folder and fill it up with a handful of sites. I’ve given you some great financial sites, which can be used for more than penny stocks research, in a moment. Read more

Which Penny Stocks to Buy: 4 Winning Indicators

If you’re like many stock investors, deciding which penny stocks to buy consumes a large portion of your time and may even prevent you from investing at all. I think many simply walk away from investing in general because they can’t make a decision.

With this in mind, I want to present you with 4 winning indicators for penny stocks that I look for before doing any penny stock trading. This isn’t some guaranteed winning stock pick checklist by any stretch. Instead, it’s a way of filtering out all the junk and stocks that really aren’t viable options. You’ll still be left with decisions to make, but those investment decisions should be far easier.

Let’s jump right into it. Read more

Where to Buy Penny Stocks Online

So you’re all excited about trading penny stocks and all the profit potential they hold, but there’s one daunting question left to answer. Where to buy penny stocks online?

Buying Penny Stocks Online – The Wrong Way

The absolute worst thing you can do is opening up an account to buy penny stocks with a shady or little-known online stock broker.

If a deal (or fees in this case) seem too good to be true, they probably are. Let’s be realistic here. You can afford to pay the fees from a good, well-known online broker and still make money.

The Internet is littered with online stock brokers that have no history, no reputation and are not stable. This is your money we’re talking about here. Don’t take on more risk than is necessary. Use a good stock broker to buy and sell penny stocks online.

Buying Penny Stocks Online – Deciding on Penny Stock Brokers

If you recall, the focus of Penny Stocks Capitalist is on what the “real” term of penny stocks implies: “penny stocks are low-prices (below $5) speculative securities.” Now, we can continue on and add “of very small companies” to that description, but I tend to look more at stock prices than company size.

There are many reputable penny stock brokers online. I recommend you use one of them that best suits your overall investing needs. Scottrade is an example of on good online stock broker. The fees are decent and their system is solid.

If you want to focus your trades on stocks under $1, Scottrade’s fees are a little more than their advertised $7 a trade fee. Before buying penny stocks, you may want to check out our article on penny stock brokers. Many penny stock traders have the potential to get their capital hammered via add-on fees (common for trades where the stock is under $1 per share).

Basically, when deciding where to buy penny stocks online you want to make sure your trades are executed fast and more importantly that your money is safe.

Online Penny Stock Trading : 7 Simple Rules for Better Results

Online penny stock trading can lead to great rewards, but like any financial investing, it can lead to ruin if you’re not careful. I’ve traded stocks online of all sizes and I’ve been successful at it by following some basic, simple investing rules.

While the penny stock arena has some similar functionality as any typical stock buying and selling, there are some unique characteristics that you should know—especially if this is your first time engaging in online penny stock trading.

Rule One: Penny Stock Fraud – Pump and Dump Awareness

Unlike many stocks in the market, penny stocks are more susceptible to fraud. Typically, you can drastically reduce your chance of buying a bogus stock run by only buying stocks that trade on the major exchanges, such as NYSE and Nasdaq.

The pump and dump scam is easy to explain. First, a stock is talked about in as many channels as possible (penny stock forums, email, etc) to get a buzz going. As people buy the stock, it rises. At some point the originators sell it off and those who bought into the scam are left holding the bag.

Rule Two: Stock Research

This followed up rule one. Learn to do your own research. Even if you’re not a business wiz, just knowing a little bit will help. When someone tells you Company X is going to explode, find out why.

It’s easy enough to find information on a company. And if you can’t find it, move on.

Rule Three: Online Penny Stock Broker

Don’t get suckered by “unknown” brokers offering amazing deals. Find yourself a good, well-known online stock broker and go with them.

Rule Four: Don’t Get Married

Sometimes you’ll invest in a stock that starts moving the wrong way, has had its run or is just plain stagnant. If logic is telling you to get out, sell it. Keep emotional attachments out of transactions.

Rule Five: Penny Stock Software

Whatever interface your online stock broker provides should be more than enough for your trading purposes. Typically, stock software that gives picks doesn’t work too well. If that’s what you want, look for a good newsletter or service.

Rule Six: Google Alerts

Yep, Google can be an awesome everyday tool for investing. By using their “alerts” service, you can be notified whenever Google finds news, blogs, links or Web pages that are about whatever you wish to know about. You can put in a company’s name, domain name or whatever.

Just type in Google Alerts into the search engine to see the link to use if you don’t know already.

Rule Seven: Play with Speculation Money

This rule applies to all investing. Progress always involves risk. As such, you shouldn’t invest with any money you’re not 100% willing to lose. By actually following this rule, you’ll be more likely to keep emotion out of your transactions, which can yield better profits.

Buy Penny Stocks Online – First 5 Steps to Penny Stocks Trading

Ok, so you know trading penny stocks can be very, very profitable and you want to get in on the action, but you’re not sure of where to start. Here’s a quick 5-step guide to help you buy penny stocks online. It’s a very easy process that anyone can do.

If you already have an account with a penny stocks broker and know the basics, this won’t help you much. This article is about the 5 basic steps to getting setup for online stocks trading.

Buy Penny Stocks

Ok, let’s get started with the 5 quick steps to getting setup for stock trading. By the way, this applies to any online stock activity, not just penny stocks, so if you wanted to trade stocks of bigger companies, such as GE, Microsoft, Google, etc, you’d follow the same process.

Step One: Stock Broker Account Creation

The first thing you need to do is setup an account with a penny stock broker. Find one that meets your needs. If you’re just starting out, I highly recommend you go with a well-known stocker and that you try to trade penny stocks that are in the $1 – $5 range.

Here are related articles to help you further:

Penny Stocks Brokers – How to Choose the Right One

Penny Stock Broker Review – Scottrade

Step Two: Stock Broker Account Funding

Once your account is created via an application, you’ll need to fund it. There are usually various ways to do this. For instance, you could send a check into the main office.

Bank wires are another option. If you’re unsure of the stock broker (features, trade execution, unknown, etc), you should send a small amount. You can always add more later.

Step Three: Penny Stock Selection

Ok, you’ve got the account setup and funded. You’re now technically ready to trade. However, you need to find stocks to trade.

This can be the hardest part for both new investors and those going into a new area. Penny stocks add a little more difficultly, because the companies aren’t usually as known.

I’d pick out an industry or “function” and start looking for penny stocks. An example would be oil penny stocks. Here’s a link to an article on that: Oil Penny Stocks

Additionally, you can monitor stock news, press releases and picks at various penny stocks sites and forums.

The goal at this step isn’t to execute the trade just yet. You just want to familiarize yourself with some stock names for further review.

Step Four: Penny Stock Research

Once you have some penny stocks you like, it’s now time to research potential trades. Usually, your account will have the ability to track stocks. I’d recommend putting the stocks you want to follow in the tracking mechanism.

It makes it easy to spot activity. Researching a penny stock can take more time than researching a “regular” stock, because there’s usually less news, financial data, etc out there.

Step Five: Trading Penny Stocks

Once you have a stock you like, it’s time to execute a trade. You’ll be paying whatever the ASK price is if you put in a market order.

I recommend always using limit orders. Put in the price you want the stock at and let it go. The only way I’d break this rule is if there was a stock taking off and rising by the minute, but that’s a less-likely scenario in the penny stocks arena.

After your trade is executed, you’ll own shares of the stock and it’s now time to monitor the stock often. As a rule of thumb, I like to have an “exit price” in mind before I buy any penny stock. For instance, I might buy a penny stock at $1 per share today with the idea of selling it at $1.50 per share. When it hits that price, it’s an automatic sale.

Any adult can buy penny stocks online with ease. It’s nothing to be scared of. At the very least, get your penny stocks account setup and going.

Penny Stock Picks – 4 Proven Tips for More Successful Trades

I think one of the problems most penny stock traders (and investors) have is they think that penny stocks are somehow different from “normal” stocks (see overview: penny stock trading). Whether you get penny stock picks from a penny stocks newsletter or a crystal ball, it’s the same as getting any stock picks on CNBC. You’ve got to follow some simple steps before putting your hard-earned capital to work. Don’t be foolish with your investments.

Read more

Penny Stock Trading – Fastest Way to Millions in the Stock Market?

There’s a lot of debate as to what is the fastest path to making millions in the stock market. If you’re starting with just a little capital, penny stock trading can certain pay huge rewards.

Penny Stock Trading

What exactly is penny stock trading though? Actually, if you buy a stock with the intent to sell it in a short period of time (minutes, day, weeks, couple months, etc), you’re basically a penny stocks trader. Conversely, a penny stock investor is typically someone who will buy stocks in a company and let them sit there for a longer period of time—usually many months, sometimes years. Investing has its merits, but I still believe penny stock trading reigns supreme because you can greatly limit your capital risk by having limited exposure and you can grow your capital by taking advantage of stock volatility.

I’ve made big returns on trading penny stocks quickly and I’ve had others that were simmering for months before they bubbled up. In reality, your best chance for success is to be flexible. What’s great is you can sit back and buy penny stocks online all trading day long.

Penny Stock Trading Success

Perhaps a better question is simply about the profitability of penny stock trading in general. After all, the real goal to wealth building is to find a vehicle that makes a profit and then improve or replicate that vehicle. While grand slams are great, most wealth is built through a constant barrage of profitable singles (if I can steal some baseball terminology).

I think researching penny stocks is more vital than anything else. Many stock traders just look for charts and technical items, but if you look at penny stocks that experience 100%, 500%, 1,000% and more growth, it was because of the company and not because the stock hit some technical indicator.

In other articles, we’ll talk more about penny stock trading and about things to look for. One idea is to look at the big companies and see who they are dealing with and what they are dealing in. That’s how I identified one penny stock that yielded me 1,000% profit when I dumped it. Penny stock trading works.