Buying and Selling Penny Stocks: What You Need To Know

Stocks that are traded at a low price, generally up to $5 a share, are called penny stocks. The companies that offer these types of stocks are usually small, volatile, and lack the liquidity needed to trade on the NASDAQ or the New York Stock Exchange.

Penny stocks are a high risk and high reward game, so trading can be incredibly fast paced. An online brokerage will help you monitor and keep track of stock activity to help you execute your trades.The best online brokerage sites to easily buy and sell penny stocks are E-trade and TD Ameritrade. Once you have set up your accounts, you will have to deposit some cash to cover stock purchases and transaction fees.

Additionally, there are many other websites that offer tips to help you identify the best penny stocks to watch, through providing analysis into the revenue potential of said stocks. Not only do these sites offer links to purchasing sites, but they also give you access to more successful investors so you can receive tried and true information on which stocks are worth the risk to invest on.

You must remember that penny stocks are highly volatile and, therefore, you must have a strategy in mind before you start trading. Once you have decided which stocks you would like to buy, simply enter the company’s trading symbol onto your online stock broker platform and make your purchase. Also, be sure to sell quickly once you have reached your threshold because the value of penny stocks fluctuates quicker than traditional stocks. This will help you avoid huge losses caused by not selling quickly enough.

Penny stock traders can easily become the victims of fraud because there is much less regulation in this arena than in the NASDAQ and New York Stock Exchange. Therefore, it is prudent for any trader to do research before making financial decisions. You can find unbiased information on sites like Google Finance and Yahoo Finance.

If you are an investor that loves to take risks for big rewards, penny stocks are an excellent way to get into the investing game. As long as you do your due diligence, through a reputable penny stock newsletter, investing in awesome penny stocks can pay big dividend for a small investment.