How To Buy Penny Stocks
To start investing in penny stocks, you need to have
an account set up with an investment brokerage house.
Then your account needs to have sufficient funds to
purchase the penny stocks that you’re interested
in. Each time you make a trade (An order to sell or
buy shares), your broker will charge you a fee or
commission. The process of trading penny stocks is
quite straightforward. The key is finding the right
stockbroker to execute your penny stock trades.
Finding The Right Stockbroker
There are two types of stockbrokers, full service and
discount. Full service brokers offer investment advice
and usually puts emphasis on larger more established
corporate entities such as Citibank and Johnson and
Johnson. Their commissions could easily run in the
hundreds of dollars. The services provided by these
stockbrokers do not come cheap.
Discount Brokers
For investing in penny stocks, the best venue would
be discount brokers that provide online trading. The
reasoning is having an online trading account gives
you access to low costs trading. To be profitable
in trading penny stocks, you need to control your
expenses. A penny stock investment can only amount
to a couple of hundreds of dollars. You don’t
want the stock commissions to eclipse your investing
in penny stocks. Here’s what to look for in
an online discount broker:
1. Commissions: This is one of the
major considerations in choosing a discount stock
broker especially if you’re active in penny
stock trading. Some online discount stock brokers
advertise commissions as low as $5.
2. Reliability and Customer Support:
Besides price, having a discount online broker that
is reliable is vital. Their web site can go down and
errors can occur. The key is their accessibility by
phone or e-mail and how quick they act on correcting
errors. To successfully execute penny stock trades,
you want a discount broker who’s online trading
system is reasonably dependable. For comfort of mind,
you always want to be dealing with client representatives
who are courteous and professional.
3. Speed Of Trade Execution: You
want a discount stock broker who will execute your
penny stock order in a timely and quick manner. This
is particularly important if the penny stock of interest
is volatile.
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