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HOW TO BUY & SELL PENNY STOCKS

Many people want to know how to buy penny stocks. However, buying penny stocks can be a slightly more difficult process than buying normal stocks. So, there is often confusion from investors about how to buy these assets. If you want to know how to trade with penny stocks, this article will walk you through all of the options for doing so. Trading penny stocks is something many people want to do.

  • It can be slightly more complicated to trade penny stocks
  • There are multiple options for trading penny stocks

Steve Miley

pro MEMBER SINCE 2018

Steve has 29 years of financial market experience including 3 years at Credit Suisse and 15 years at Merril Lynch. Steve is the Academic Dean for The London School of Wealth Management and has won many awards from Technical Analyst Magazine.

10 min read 28th of May, 2018
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FIRST – DO YOUR RESEARCH

Before you even start asking people how to buy penny stocks or how to trade with penny stocks, you need to do a large amount of research about the company you are interested in. The reason is because penny stocks are much, much more risky traditional stocks. This is because penny stocks represent shares of companies that are much smaller and that are much less established than companies with traditional stocks. There’s also an incredible amount of volatility in the penny stock market.

HOW TO BUY & SELL PENNY STOCKS

Further, the penny stock market is also very prone to fraud. This is because pump and dump schemes are much easier to run in the penny stock market because there’s far less regulation of this market. Sometimes, people create penny stocks for companies that do not even exist. This is another type of fraud that occurs in the penny stock market. So, before you get involved with penny stock trading, you really need to do a lot of research. It is not something that you should just jump into. You can begin your research by identifying promising companies. Then, you should narrow these companies down to the ones that you like the best. After that, do extensive research on those companies. Only after you have done all of these things will you be ready to invest in a penny stock.

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UNDERSTANDING THE OVER THE COUNTER (OTC) BULLETIN BOARD AND PINK SHEETS

If you have been typing “penny stock trading” or “penny stock trading UK” into Google, and are planning to invest in penny stocks, then it is crucial for you to understand both the Over-the-Counter Bulletin Board (OTC Bulletin Board) and Pink Sheets.

The OTC Bulletin Board and Pink Sheets are both quotation services for penny stock companies.

These services are extremely important because they provide up-to-the-minute quotes for penny stock prices. Without these services there would be no way to tell which direction penny stock prices were moving in. Having accurate stock quote information is crucial if you’re going to be trading penny stocks. After all, you need to know what the current price of the stock is if you’re planning on buying it. Both the OTC Bulletin Board and Pink Sheets provide quote information for many different penny stocks. This makes them both great places to conduct penny stock price research. Traditional stocks are not listed on the OTC Bulletin Board or on Pink Sheets because they are listed on either the NASDAQ or the New York Stock Exchange

ONLINE BROKERS

Although online brokers primarily offer traditional stocks many online brokers do offer penny stock trading. These brokers are the answer for people who ask how to buy penny stocks or how to trade penny stocks. For example:

  • TD Ameritrade,
  • TradeStation,
  • Fidelity

However, these online brokers do charge significant commissions. This means that you will be paying them money for every single trade that you make if you decide to use them to buy and sell penny stocks. Technically, a penny stock is any stock that trades for under $5. The vast majority of stocks on online brokerages are not penny stocks and trade for over $5. However, you will be able to find many penny stocks available on these platforms, which makes them a very good place to buy. So, if you want to buy penny stocks you can get price quotes using the OTC Bulletin Board or Pink Sheets. You can open an account with an online broker and use this account to buy the penny stocks. This method of buying penny stocks is fairly convenient and it’s simple enough to do. So if you try and buy penny stocks using this method, then you will most likely find it relatively easy. Choosing the right penny stocks to buy is another matter entirely.

PENNY STOCK TRADING

HOW TO GET GOOD AT PENNY STOCK TRADING

When you first start trading penny stocks, you are unlikely to be very good at it. This is because penny stock trading is a skill that is learned over time, with practice. However, there are many different resources available that can help you learn to be a better penny stock trader. The first is demo accounts. Demo accounts are stock trading accounts that only use virtual money and that do not allow you to lose any actual money. With a demo account you can practice buying and selling penny stocks and see what results you get. You can then adjust your strategy based on your results, and you can learn from your mistakes. Demo accounts are a great tool for learning. You can also take stock investing courses. Many brokerages have education sections that offer online courses, ebooks, or instructional videos for how to become a better investor. These courses and learning tools can be highly beneficial. The more that you practice and the more that you learn, the more likely you will be to make a lot of money trading penny stocks. Start small and grow as the time passes, start with the amount that you truly can lose.

WHO SHOULD NOT INVEST IN PENNY STOCKS

Penny stock investing is not for everyone. In fact, there are many people who should simply avoid investing in penny stocks. While there are a lot of great aspects when it comes to penny stocks, they will not be suitable for every person. There is the potential to turn relatively small amounts of cash into significant sums in a short space of time, but the inverse is also true – you can just as quickly see your funds disappear in the blink of an eye.

This is because penny stock investing can result in major losses. People who should not invest in penny stocks include casual investors who do not to do research, whilst novices who have no experience investing in stocks should also avoid investing in penny stocks until they have some more experience. This is because penny stock investing can be a lot more difficult than investing in another assets.

WHAT DO YOU DO IF YOUR PENNY STOCK INVESTMENTS FAIL?

If your penny stock investments fail, then you may be tempted to simply rush back into the market and buy a bunch more penny stocks. However, if you do this there’s a chance that you could lose the new money that you put in as well. For this reason, you should not just dive right back into the market if you lose a lot of money investing in penny stocks. The first thing that you should consider doing if you lose a lot of money on penny stocks is to try to figure out why you lost the money. For example, you should try to figure out whether or not you fell victim to a pump and dump scheme, whether you invested in a failing company, or whether something else went wrong. After you figure out exactly why your investment failed, then you should write this lesson down and try to avoid making the same mistake again. Research your new investments thoroughly before buying the penny stocks. Also, it can wise for you to consider practicing more with traditional stocks because they are safer.

Determine from the outset the amount that you are wiling to risk on investing in penny stock and if the amount allows it try to diversify the risk across a number of companies and sectors. By doing this you will diversify the risk. You should start from the assumption that inevitably you will fail miserably on some of your investments as indeed you are buying small businesses.

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Conclusion:

HOW TO BUY PENNY STOCKS

First, make sure that you have had enough investing practice and training to know what you are doing. You need to also make sure that you have conducted enough research on the investments that you are making. For every penny stock you buy there should be a very good reason why you think that the stock price will move up.

You can find the prices of penny stocks listed on the Over-the-counter Bulletin Board or on Pink Sheets. These services provide up-to-the-minute accurate prices for thousands of penny stocks. Once you decide which stocks that you want to buy, you can then open a brokerage account with an online broker such as Fidelity or TD Ameritrade. These brokerages offer a wide variety of penny stocks. So, you are most likely going to be able to find the penny stock that you are looking for on these sites. When you find the one you want, all that you have to do is make sure that you have deposited money in your trading account, and then click buy stock. It’s as easy as that. Just make sure that you choose the right stocks, however. Otherwise, you could lose a lot of money.

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