Buy Penny Stocks Without a Broker

If you are a new investor, or even one who has been buying and selling stocks for awhile, you may find penny stocks appealing. You can buy penny stocks without a broker, which has both good and bad points. It is cheaper to buy and sell without a broker, but also more risky because you’re not getting professional expertise. The best thing you can do is learn as much as you can about the world of penny stocks before investing any money.

A penny stock is usually defined as a stock costing less than $5 per share. The best way to buy penny stocks without a broker is to open an online account with an Internet based firm. There are all kinds, which include but are not limited to Ameritrade, ScottTrade, Fidelity and more. Prices per trade can range anywhere from a few dollars to as much as $20 depending on the company you choose. There is even a company called ShareBuilder, which has a very low minimum and is dollar based rather than share based. It is a good choice for investors who don’t want to spend much and want to build a portfolio over a long period of time.

While the idea of buying cheap stocks that may grow in value sounds good, you should know that penny stocks fall under the high risk category. First, choose your online broker. The cheaper, the better, because the less you pay per trade the more money you will make on your returns. Basic knowledge of stock trading is imperative, so if you don’t know the first thing about trading educate yourself before even attempting to trade any type of stock.

Do as much research as you can on a company with which you are thinking of investing. There are software programs and online guides that can do this for you, which is another option if you don’t feel comfortable doing your own research or cannot find ample information on a company offering penny stocks. Of course these programs are not infallible and there is still risk involved even with the technical analysis and direction provided.

There are success stories of investors who chose winning penny stocks that skyrocketed in value. However, this is not the average case. Once again, it must be emphasized that penny stocks are a risky investment. Some day traders specialize in trading penny stocks, because the value can rise and fall dramatically in the course of a single day or a few hours. Day trading is another high risk investment strategy. However some investors enjoy taking big risks, and have the money to do so. If you are one of them, and have money to invest that you can afford to lose, trading penny stocks might be right for you.

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