Penny Stock Basics - Online Penny Stock Trading

How to Trade Penny Stocks

In this segment I will offer an abbreviated summary of the actual penny stock trading process. Learning how to trade penny stocks is not that challenging from a technical perspective, however it is important to consider a number of things before you begin investing your money in this risky niche market.

The first step is to create a stock trading account with one of the online penny stock brokers. You will find many online brokers offering different services and charging different fees. The most common online brokers happen to be E*TRADE, TD Ameritrade and Scottrade but this does not mean they are the best brokers for each and every situation. Some contend that Zecco is a decent choice for novice traders because it is so inexpensive, but you need to look at each of the brokers to make your own decision of who is best for you.

Once you have your trading account set up you can start getting into the fun part of penny stock trading.

Penny Stocks Online

by Charles

Before you even think about starting to buy penny stocks online, you need to understand what penny stocks are and you need to understand the potential risks involved in trading these off-exchange stocks. Buying penny stocks online can be a lucrative business if you know what you are doing and you understand this specific market, but it isn’t necessarily an easy way to make money fast.

There is a learning curve and a skill to buying and selling penny stocks to increase your income. Among the things you will want to learn is how to calculate the market cap of these investments. Learning how to compute the market cap of a stock can help you determine the dollar shares of all of the shares within the company at a given point in time.

Penny stocks are listed on the OTC market, not on the securities market like many other stocks. Besides learning how to find and monitor them you’ll need to look for a broker to help you facilitate trades if you want to start buying penny stocks. There are a few different types of online brokers from full service to discount and everything in between. When researching online stock brokers you’ll want to evaluate a few different brokers considering their fee structure, services provided and minimum account balances.

How To Build A Penny Stock Trading Plan

by Charles

Penny stock trading may sound interesting, but without taking the time to develop a solid plan it can be financially risky, to say the least. Take the time to develop a plan. This plan will help you achieve greater success, it will help you make decisions quickly and it will help keep you grounded.

There are a few basic tools you will want to use as you develop your plan. Because research of this market and of different trading strategies is so important, one of the most important early tools you can use include books. Read books on topics like risk management, technical analysis and the psychology of trading. They will give you a lot of insight into your own preferred style and how it will work with this market.

Once you have some background it is time to start testing and practice trading. These two things will help you really start to get a feel for this type of trading. You should know you’re ready when

Penny Stocks Are For Trading

by Charles

On average penny stocks lose value over time. Buying penny stocks and holding on to them is risky for a few different reasons. Finding solid information on these companies is often difficult. The requirements for penny stocks are less stringent than they are for other stocks and often public information on these companies is scarce. They are also quite volatile, and their volatility can be quite difficult to predict. Then there is the complication of volume. Penny stocks are often thinly traded, so it can be more difficult to buy or sell the amount of shares you would like.

So why do people still dabble in penny stocks? If you can learn how to day trade you can reduce the risk of time by not holding onto them for too long and use their volatility to your advantage.