How To Get Started In Penny Stocks

If you are looking to get into the stock market, you may be interested to know that you can get started in penny stocks by investing a relatively small amount of money on a short term basis for very high gains.  Investing in penny stocks is an alternative option to conventional blue chip trading, which offers you the opportunity to manage short term investments yourself with the  potential  of yielding triple digit profits of 400% and more.

Sound good?  Go here to find our recommended penny stock investment program.  Read on to find out what you need to know to cash in on this lucrative investment strategy.

What’s so special about penny stocks?

Trading in penny stocks can yield extremely high returns, however it can also be extremely risky with less than 3% of penny stock companies ever yielding any profits.  Having said that, over the past 40 years, these small cap stocks have significantly outperformed the overall market.

Penny stocks often sell under the radar for less than $5 per share and sometimes for a few pennies, and yet they have provided explosive investments of a type that have only been associated with days gone by.   However, even though these cheap stocks have the potential of soaring in value very fast, you won’t be hearing anything about them on Fox Business News or CNBC, because they are considered too small for investment banks to get involved in.

Fact is, big investment banks would rather keep this market a secret as they would prefer you to invest in stocks and shares that they control.  Buying up millions of penny stock shares would explode the share price and potentially divert potential profits away from them.  That is why very few people are aware of the existence of penny stocks and how to take advantage of the dizzying returns on investment they offer.

All early investors in large cap stocks like Wal-Mart, Dell, Cisco and Microsoft are now living the high life because they invested dirt cheap before the masses were alerted, causing the share prices to rocket.  And although it would be great, you don’t have to find the next Microsoft to profit in penny stocks.  You just have to know when to move.

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How to Start Investing in Penny Stocks – Find a Broker

If you are new to stock investing, the first thing you would want to do is find a way to invest your money.  You need to set up an account with an accredited penny stock broker, or through an online brokerage account.  The accredited broker will watch the stocks, make the trades for you and provide some advice.  If you use the online brokerage account, you are in complete control of the trades.  There are fees charged for both kinds of services.  Investigate the fee schedules of any service you are considering and whether the services are compatible with your requirements.

How to get into Penny Stocks – Do Your Research

The key factor in penny stock trading is research.  You need to know everything about the company you wish to invest in.  With penny stock companies, this may prove to be difficult as they will generally be small and unestablished, relatively unknown and often unheard of unless you intensify your research.  Things to look for are online analytical reports that will give you a good indication of the financial health of the company and the way their shares are likely to perform in the market.  News articles are a good source to check for news on the company as well as any strategic announcements or pending takeover bids.

How to Start Trading Penny Stocks –  Timing is Everything

You will need impeccable timing to know when to sell your shares to get the best  gains on your investment.  Avoid being greedy and get out while the current investment is sitting at a good price.  If you are tempted to wait, you may miss your chance when the price starts falling.  Look at the investment objectively and make a decision based on whether the price is a good one considering the status of the company, and decide whether it has shown enough growth for you to make a good profit.  After a few trades you will be more experienced at gauging the market and deciding when to sell.

How to tank in penny stocks – What about that hot tip?

Here’s the thing, 97% of all penny stocks out there are complete duds and will never earn you a dime, let alone a penny!  So, unless you are a real savvy, experienced stock trader like Warren Buffet, chances are you won’t find that golden needle in the haystack.   Remember, you’re looking for undervalued stocks, not under performing companies.  Chances are, that hot tip you heard was a scam, just lots of hype to pump up a stock so someone else (not you) can profit.

If you are serious about this investment strategy you can do all the careful research and educate yourself on the stock market, or you can do what most penny stock investors do and subscribe to a penny stock newsletter or service.  These experts do all the painstaking investigation and number crunching before picking the best stocks and recommending them to their subscribers.

How to succeed in penny stocks – listen to the experts

A good program will educate you step by step on how to get started, stock market jargon,  and how to trade stocks even if you’ve never traded a baseball card in your life.  Most  importantly, a good program will tell you what stock or stocks to invest in, when to get in and when to get out.  Additionally, a good program will have a plan for you to systematically build your wealth.  Stay away from any program that promises to make you a millionaire over night.  That just won’t happen on a couple hundred dollar investment.

You can get started in penny stocks with a modest investment of $200 – $1,000 and see returns in a couple of weeks.  Then invest your profits for further trading, which could result in fantastic returns on your investments with no financial risk.

If you want to learn more about how to get started in penny stocks with a penny stock program check out my review article where I look at the top 4 programs and make my pick.

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