How to Buy Penny Stocks Online
If this is the first time you’ve ventured into the investment world, you may wonder what a penny stock actually is. In a nutshell, it is any stock trading investment under the sum of $5. Sometimes, it is called the nano stock or even microcap stock. So if you see any of these terms, you can be sure they mean the same thing. Of course it is actually more complicated than that in its fuller explanation and this is something you will probably delve into much later if you consider the investment market seriously.
The beauty of penny stock shares is that they are at a price within most people’s budgets and you can start buying and selling without shelling out a lot of money. Obviously, do not spend any money that you cannot afford to lose as the investment market can be tricky, so when starting out, try to get as much advice as you can from trusted sources.
Where to start?
The first thing you will need is cash and a means of depositing it to an online account as you will need to find a stockbroker who will provide the shares. Fees of stockbrokers do vary as does the amount they trade in, so shop around before committing yourself. Once you have found yourself a reliable broker, you will need to open an account with them and deposit some funds into it before you can start to consider buying any penny shares. You will need to be able to transfer funds to your chosen stockbroker and you can usually do this by wire transfer, internet banking or in some cases, checks.
Your online broker will give you advice on what stocks to buy and it is recommended you follow that advice to prevent heavy monetary losses. As penny shares are a bit more unpredictable that normal stocks and shares, the amount of in-depth information about them will be far less than the usual commodities. However, don’t be put off by this as many people do make money from penny stocks.
Once you have decided on your stock options, you will need to place an order with your broker. Most brokers will help you with this if in any doubt. A small amount of study of the markets beforehand will ensure you have watched the growth and loss of any potential stocks and you will be aware of when to buy at the lowest possible price which is important to ensure any kind of profit. There is plenty of information out there to help guide you and there are also forums set up specifically aimed at this area of investment. It is a good idea to invest in a couple of different areas to spread the chance of profit, for example, it’s good to choose penny stock shares that have a history of performance to give a good rate of return, even if it is small.
It is important to watch your shares closely to ensure you sell at the right price. Sometimes, this may need a quick decision depending on what is happening in other markets. A small window of opportunity can easily be missed. Once the share has been sold, hopefully at a profit, it is a good idea to re-invest it into winning shares.
There are occasions when you will lose money as well as make money and this rollercoaster is a motivating force for many people in the investment world. Do not expect to make pots of money to start with and be patient. As you become more experienced, you will find this highly addictive market yielding positive results more consistently.