So you’re just getting started and you want to know where to buy penny stocks — slow down! If you’re asking that question, you definitely need to take a deep breath and start from the beginning.
Unless, of course, you’re literally asking where to buy penny stocks online from the top online brokers… if you already feel confident in your understanding of the basics, then head over to my description of brokers: penny stock brokers.
On this page I’ll explain the basics of where and how to buy penny stocks in a simple, concise manner. I’ll link you to other pages on Penny Stock Trading or to quality resources out in the web where I feel you need to read further on a specific matter.
This is simple. You need two things to begin penny stock trading: money and a broker. I know some of you may be thinking in terms of pennies when you see money, but let’s be realistic. Many penny stock brokers require a couple thousand dollars as minimum balance to open and keep open an account with them.
Even for those that don’t require a minimum balance, let’s be honest: If you don’t have enough cash to keep about $2000 in one of these brokerage accounts, you probably shouldn’t be messing around with buying and selling penny stocks.
You will actually find the penny stocks to order on the OTC Market. Read more about Pink Sheets and the OTCBB in my OTC Market tutorial: OTC Market: OTCBB and Pink Sheets.
No matter who you are or which area of trading stocks you’re entering, you will need a stock broker to execute your buy and sell orders. First you need to choose between two different broker types: Will you need one which provides full service, including research and charting tools, or are you already equipped with enough tools and knowledge to go with a bare bones discount stock broker?
The obvious advantage you’ll enjoy with full service broker and account is that you will receive more personalized attention as well as greater research tools. In many cases a real human being will provide feedback to your needs. The full service stock broker will try to understand your investment goals and based on that offer you recommendations, such as when and what to buy and sell. Such service, however, come at a price. You can easily pay ten to twenty times the commission for each share traded with a full service brokerage as you might with a discount stock broker.
In my opinion, you might experiment with the discount services of a full service brokerage just to get your feet wet.
However, I don’t feel full service brokers are the best fit for penny stock trading because these types of trades involve trading smaller stocks much more frequently, so high commission charges will bite a chunk out of your bottom line profits. Thus once you’re really serious about delving into the world of penny stocks, I suggest you utilize an established discount stock broker.
While Discount stock brokers by design will not provide the same degree of service and personal attention as a full service broker, most will still be available to address your stock trading concerns. It is possible you have seen television commercials for discount broker s who execute trades for low fees like ten to twenty dollars. With such low commissions, it is easy to understand the greater flexibility you enjoy for trading penny stocks. Really, when people refer to penny stock brokers, they’re most likely referring to discount stock brokers.
Discount stock brokers were really the first to move online, so they generally tend to provide more comprehensive and refined web-based services. While almost all brokers now provide some kind of online access, the user-friendly and detailed information provided by discount stock brokers still tends to lead the pack.
I still appreciate the ability to monitor account activity, track open orders and quickly obtain stock quotes and relevant market information all in one place. Such 24/7 access is a boon to penny stock investing in particular as you constantly need to keep a close eye on your goals and exit points.
So browse through my penny stock brokers list and select a broker or two. Yes, I said two. If you can afford it, I think it is wise to try a couple different brokers before investing all your time and money with a single service. I suggest complimenting a pure discount broker with a service that leans a little more towards being a full service brokerage firm.
Either the site or an individual will take you through the required forms for opening your stock trading account. You’ll find the process similar to opening a standard bank account where you must make an initial deposit. Your account should be approved and active within just a few business days.
Take a deep breath as you view your new account. This will be the home base for your trading money. Your trading account will house all of your trading assets, from cash to stocks to bonds. The money deposited will be utilized for executing your penny stock purchases. And then when you want to sell, the money from the sale enters right back into this account for future purchases.
I hope this article helped you get your head around the initial process, and as well as the process of selecting a broker. Thank you for visiting.