Penny Stock Basics - Online Penny Stock Trading

Red Flags to Watch For When Evaluating Penny Stocks

Penny stocks are risky, but that doesn’t mean you shouldn’t have any in your investment accounts. There are certain stock screens you can use to help weed out bad penny stocks. These tips should be used as part of your initial screening process along with other technical and fundamental screens to pick your list of acceptable penny stocks. Keep in mind these screens won’t be as useful once you have already invested in a stock, but they may save you some heartache upfront.

Practice Trading Stocks To Reduce Risk

by Charles

Most consider penny stock trading to be the exchange of stocks at a price between $1 and $5 per share. You’ll also see them labeled as micro cap stocks, microcap stocks, nano stocks or even just small cap stocks. But that doesn’t mean there is less risk involved in this market; in fact these stocks generally carry more risk. That’s why it’s a good idea to practice trading before you start investing real money.

Penny stock trading occurs within the OTCBB (Over-the-Counter Bulletin Board) or on the Pink Sheets. So you’ll also find these stocks labeled as OTC stocks (OTC stands for over-the-counter). They tend to represent smaller companies, newer companies or struggling companies. They either haven’t proven themselves enough to list on NASDAQ or the grand New York Stock Exchange (NYSE) or in some cases they’ve been penalized by those exchanges and removed.

There is a common misnomer regarding this type of trading.

Penny Stock Quoting Systems

by Charles

While you can get your stock quotes online or in the paper if you want to be successful at trading penny stocks you will need to check stock prices more often then after the market bell at the end of the day. Instead you may want to look into penny stock quoting systems to provide you with more up-to-the-minute quotes and further capabilities.

There are a few different levels of quotes with different degrees of detail and other functionality. Level I stock quotes are similar to the information you get on the news, while Level III stock quotes include quotes on stocks as well as the ability to execute trades and send out a notice that trades were executed.

Since the price of penny stocks can change so quickly and so frequently throughout the day, the more information and capability you have with stock quoting systems the better chances of your success with penny stock trading. This is an already tricky market so all the tools you can find to help can make a big difference.