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.