Learn How to Trade Penny Stocks6072378
There are some fundamentals you need to understand before you learn how to trade penny stocks. You need to comprehend that this is a profession with rampant fraud and tons of manipulation. You must appreciate that any kind of real stock trading is a serious business involving genuine risk with genuine money. In this article, I will explain the fundamental steps you require to master to execute a penny stock trade.
Select A Trustworthy Broker
First up you need to choose a broker. The best recognized online stock brokers are probably TD Ameritrade, Scottrade and E*Trade with Sharebuilder gaining steam. However, just because they're the most well-liked does not mean they are the very best brokers for your scenario.
Nevertheless you choose your broker, be very, very careful you select an established and reputable broker and not some kind of obscure deal maker you find online. It is not uncommon for savvy investors to take benefit of novice investors, especially in the area of penny stocks. So stick with established, known entities.
Your Investing Capital
The next significant step -- and the step that indicates you really mean business -- is to connect your bank account with your broker account. I urge you to setup a separate bank account from your main checking and savings accounts for your penny stock trading. I also encourage you to not start trading until you have substantial capital separate from living expenses in your trading account.
Executing the Trade
Now prepare the following info for your broker to execute the trade. First, find the quotation service exactly where your broker can identify the stock. For instance, is it on NASDAQ or is in the Pink Sheets? Next, define for him the stock's ticker symbol within its listing service. Then you should specify the precise amount (or "volume") of the share you want to buy. Keep in thoughts that regardless of the term penny stocks, you will likely need to buy in multiples of a thousand shares to keep the brokerage charges affordable.
Now describe your precise purchasing price and the expiration date for that cost. Sometimes, especially with penny stocks, purchasing a share is not an instantaneous procedure. The expiration date defines for your broker how long he ought to keep the order active. Once that date hits, your order expires. This tends to make it so you don't accidentally buy a dated stock which you may not want any longer. And then when you sell, you use a limit order to sell.
