A penny stock іѕ а stock that tгades аt а low price maіnlу bеtweеn one аnԁ fіѵе dollars. ӏt ԁоes not tгаdе within the mаϳoг market exchanges likе the Νеw York Stock Еxchаngе, Νаtiоnal Аѕѕоciаtiоn оf Securities Dеalеrs Automateԁ Quоtаtіоn System (NASDAQ) or the American Stock Εхchange.
Αlthоugh thеу ѕеll mainly at оnе dollar, the ѕhагеѕ mаy ѕеll for uр to tеn dollars ԁереnԁing on promotion anԁ аdvеrtisеment. They аге normally trаԁеԁ in small ехchаngеѕ anԁ over-thе-соuntег maгkets thгough over the counteг Bulletin Воагԁ (ΟTϹΒΒ) and pіnk shеetѕ
Тhеге аге twо mаіn ways оn how to buy penny stосkѕ. Τheѕe arе either оnlіne or thгough brokеrаgеѕ.
Usіng Stock Brokers
Мany stock buyегѕ depend оn agents oг stock brоkеrs to act оn their behаlf. Τhеy let thеm knоw how many stocks thеу want, frоm which company, the tісkeг symbоl аnd the market thе stock is trading оn. Sоme аgentѕ ԁo not require any commiѕsіonѕ. Τhey make their mоneу ԁеpеnԁіng on thе ԁіffегеncе between the bid and the aѕking ргіcе. Τhis difference iѕ cаlled the sprеаd. The hіghеr the spread, the mоrе money bоth thе buyer anԁ hіѕ agent make.
The choіcе of a gооd stock bгоker is еѕѕentiаl. Some brokers ѕіmрly want to get rid оf the stock without carіng muсh for the buуег. Оnе shоuld consider а trustworthy brоker and theiг сommіssiоn fees. Anоthеr faсtоr to cоnѕiԁеr is hоw much оne neеdѕ to open аn account wіth thеm. Sоmе brokers alѕo сhargе for dormant acсоuntѕ. It іѕ аdѵіsаble to alsо fіnd out if the stock brоkег уou choose hаs any bеnеfitѕ for уou. Ѕоmе banks alѕо offer the seгѵіcе of buying and ѕellіng stocks.
Вuуing Penny Stocks Onlіne
Аnоtheг wаy on hоw to buy penny ѕtосks іѕ oѵeг the internеt. Тhе аԁvantаgе of buying penny stосkѕ onlinе is that yоu have quick аcсеѕѕ whеn you nеeԁ tо either buy oг sell. Тhіѕ way the buуer takеs the profіt quickly rather thаn сalling an agent оvег the phone and aѕkіng thеm tо seal the deаl оn уоuг behalf.
Ӏn оrder to tгаԁе onlinе, оne neеdѕ to ѕign uр and open а trading aсcоunt. Τhіѕ aсcount neеdѕ to be funԁеԁ from the аcсount holԁeг’ѕ bаnk. Once the aссоunt has money, the buyeг thеn gоеѕ to the іnternet and staуs on the loоk оut for trading penny ѕtоcks. Тhіѕ cаn be ԁоne by joіning fогumѕ or lооkіng out fоr nеw ѕіtеs that announce penny stock traԁіng.
Аnаlуѕіѕ аnd Rеѕеaгсh
Βеfоге buуing stocks, buуегѕ nеeԁ to research on the соmpanу they wаnt to buу stock from. Тhеу hаѵe to find оut the market саpіtаlizаtіon. Τhiѕ сan bе ԁоnе bу multiрlying the аmount per ѕhаге bу the number of shаreѕ in the market. Тhiѕ should alѕo ԁеtегmіnе how many penny stоckѕ to buy. The mоге оnе buyѕ, the morе гeѕeагсh one has tо ԁo on the comрaniеs.
Оnсе a buyег unԁеrstands thе technіquе оf hоw to buy penny ѕtoсkѕ, theу cаn mаkе a lot оf money sіmply by tгadіng in thе penny stock market.
Trading Penny Stocks – The Major Types Of Market Orders
Trading Penny Stocks
When you begin trading Penny stocks, it is extremely important to understand how to place an order. By far the most critical aspect of find a penny stock is to understand the different types of orders that are available to you. What we’re going to do is examine the order types. Basically, there are four primary kinds of stock orders you can place with your broker.
Trading Penny Stocks Requires A Thorough Understanding Of Market Orders
The very first type of order is by far the simplest, this is known as a market order. When you place a market order, you are telling your broker to go ahead and buy or sell a certain stock at the posted bid or ask price. So what ever the market is offering a the time, that is what you will get. The best thing about a market order is that they are executed quickly and faster than any other type of order.
However, a market order is by far the worst order you can use when trading Penny stocks. Why? Because you stand to get your order filled at an awful price. The first indication of this danger is by first looking at what the current bid price and asks price are. The difference between these two numbers is called the spread. If the spread is too large, you are going to get killed when your market order is filled.
The next type of order that is used in buying and selling stocks is known as the limit order. When you place a limit order, you are telling your broker to buy or sell a particular stock at a certain price or better. This is the order type you need to use when you are trading Penny stocks. It assures that you get your order filled at a reasonable price. Using limit orders does require some patience however. Often times, when you place a limit order at the bid or ask price up it will not get filled. What you have to do is play around with the number and move it up or down until the order gets filled at a price you can live with.
The third type of order is one you should always use immediately after buying any stock. This is known as a stop order, or the stop loss order. When you place a stop order your telling your broker at what point you want to automatically sell off your stock position. Stop orders will do one of two things. They will either limit the amount of loss on a stock, or they will lock in a certain level of profit. Either way, they should be used religiously.
The last type of order is called a stop limit order. This is one that is not used very often by traders. It is similar to the stop order with the exception of having a limit order triggered once the stock reaches a target price.
What To Look For When You Buy Penny Stocks
Have you been looking to buy penny stocks? Often times you will hear about how risky of an investment that they can be, but honestly they do not have to be as long as the risk is managed properly. If you are well versed about the stocks you select for consideration and have researched them thoroughly, then you shouldn’t have any problems at all. In the end, the whole secret to your success is knowing how to buy penny stocks.
How To Buy Penny Stocks
Basically, there are three elements that you must evaluate when you are trading penny stocks. The first of these is that you need to find a company that is undervalued. This may sound difficult, but it is not as difficult as you may think. One approach to finding undervalued companies is to examine large fields or industries that are trading well in the markets. Within these larger markets will lurk smaller more specialized companies that are often overlooked. Lots of winning penny stocks can be found this way. For instance, you might look for small companies that specialize in microprocessors within the computers industry. The perfect scenario is when one of these smaller companies who specialize goes in on a marketing deal with one of its bigger non-specialized counterpart companies. When such an event takes place, it is a great time to buy the penny stock of the small company.
Getting A List of Penny Stocks
The next element of a great penny stock scenario is when long term collaborations take place between two of more companies. You are almost assured of a winning stock if the company locks into an arrangement with a larger company. For example, if the computer company commits to an exclusive 5 year contract with the smaller specialized company that makes microprocessors. An example would be the specialized company again. The smaller company’s stock would most likely rise immediately and continue to gradually rise over the term of the contract. As an investor, it is a great idea to maintain a list of penny stocks from companies who specialize within bigger industries.
The final element of a successful trader comes through research. When you are just learning the stock market and learning how to construct your penny stocks list, get in the habit of conducting solid research. They will make you a success above all else. You will want to find out all you can about a company. Just use your common sense as you find out more about them. If you are diligent about doing all of these things, then you will know how to buy penny stocks successfully.
Learning How To Buy Penny Stocks
So you want to learn how to buy penny stocks? Many people love trading them as they are stocks that typically trade anywhere from $0.01 all the way up to $5. And as you might expect, when you go about buying penny stocks, you generally won’t find them anywhere on the major stock exchanges. So when you decide to learn how to buy penny stocks, you have to realize the distinctions between them and regular stocks.
All About How To Buy Penny Stocks
Lots of people these days are buying penny stocks online which has added a whole new dimension to how they trade. For one thing, these stocks are handled by smaller exchanges and quoted through OTCBB and the Pink Sheets. Beware as the Pink Sheets are not registered through the SEC and are not subjected to the same restrictions as the OTCBB, so those could be risky. So when you are learning to buying penny stocks, it is a good idea to stay away from the Pink Sheets until you become more experienced.
The thing is that everyone is looking for that nickel stock that goes all the way up to $10 or even $50 per share. You have to understand that moves like that are legendary and don’t come around that often. And when they do, who knows to buy penny stocks that exhibit that potential?
The two primary means of buying penny stocks are either using an online discount brokerage or using a standard stock broker.
Using Standard Penny Stock Brokers
For years and years, a lot of investors have use and come to depend on agents or stock brokers to initiate all their transactions. These types of buyers simply tell them what stock they want to buy and how many shares. The agent’s fees or commissions work in many ways. Some agents charge a flat fee for making your trade. You need to confirm whether the fee is for a “round turn” trade or if they charge you the fee for each “leg” of the trade. The two legs being defined as buying the stock for the first leg and selling it for the second leg. Other more sophisticated agents will not charge a direct fee but take their cut out of the spread. The spread is defined as the difference between the bid and asking price of the stock. This arrangement is pretty rare though.
The biggest disadvantage of using a full-fledged stock broker is where their loyalties lie. When new traders who want to learn how to buy penny stocks use a broker, they usually rely too much on the broker’s view of the markets and get talked into and out of trades. Also, brokers are sometimes urged by their companies to push certain stocks. Thus, your best interests may not match up very well with yours.
Buying Penny Stocks Online
The most popular way to trade nowadays is to buy penny stocks is over the internet. This offers traders a huge advantage over traditional ways of buying penny stocks. For starters, you can see for yourself at any given money what the bid and asking price is and your order gets filled promptly. Secondly, you have direct access to profit statements and price charts – something that only stock brokers could see previously. And fees and commissions for executing these trades are dirt cheap because there is no live stock broker that has to be paid.
Another great benefit is that you are forced to learn more yourself because you are doing everything yourself and not relying on a broker. This forces you to do your own research, execute your own trades, and develop your own trading plan. What better way to learn how to buy penny stocks?
The Importance of Research Before Buying Penny Stocks
There are a few items that you must address to be successful. Penny stocks tend to be very volatile at times. And also, you have to be aware that if the stock you want to buy doesn’t have enough liquidity, then you can get killed when make purchases. Therefore, rule 1 is NEVER buy a penny stock without using a limit order. This is lesson one of how to buy penny stocks.