Make Your Money Work Well in Lesser-Known Market Corners
What you are buying when you buy OTC? You are not on the NYSE or Nasdaq here. You are in a quotation-driven market where dealers post bids and offers, and many issuers are tiny. The SEC uses the term penny stock for low priced securities that are generally under 5 dollars and not listed on a national exchange; brokers must give you special risk disclosures
Penny stocks are the home of brilliant traders and gamblers, honest entrepreneurs and scammers, honest value driven penny stock brokers and broker pond scum. The dichotomy of risk and reward are the greatest in the penny stock investments. The siren call of huge returns brings many investors who are looking for fast riches.
Just because this niche draws some less than reputable types doesn’t mean you shouldn’t invest in it though as there are great reasons for trading and investing in micro caps. If you’re looking to get into penny stocks you just need to learn how to pick your penny stock broker wisely.
If you are just getting started in the business of penny stock trading you’ll need to know where to buy penny stocks. But before you even ask this question it is important to understand more about this specific market and these stocks to see if this is something you really want to consider.
There is a simple and a not so simple answer to the question of where to buy penny stocks. There are a number of brokers who can help you buy and sell penny stocks, but to get the most out of your time and money you want to choose the right brokerage company. Each of the online stock brokers offers different services, has a different minimum balance and charges different fees for each trade. You may initially want to go with the cheapest broker but this isn’t always the best way to go, at least in the beginning.
Besides choosing a broker you need to know where to go to find and research these stocks so you can monitor them and determine which ones to buy.
Choosing the right penny stock broker can help make or break your successes and your profits. You want to watch out for certain red flags that are a sign of a questionable broker all while considering some of the basics like required minimum account balance. In this equation there are three specific things you should research before you commit to a broker. Understanding these three things and why they are important will help you increase your profits in this fast-paced niche of stock trading.