How to Trade Penny Stocks Online

If you want to learn how to trade penny stocks online you are not alone. This is a great way to make a lot of money, if you know what you are doing. While there is a big risk involved, the more you know about trading these stocks the better off you are going to be.

Open an Online Brokerage Account

The only way to trade penny stocks online is to open an account with a popular service such as Ameritrade, Scottrade, or E*TRADE. While these brokerage services are among the most popular, there are many others that will make it easy for you to trade penny stocks. You should choose the one that you are most comfortable doing business with.

Before you begin to trade penny stocks, become familiar with how this is done, the fees that you will incur, and the steps to take if you want to sell. It is better to learn about these details upfront, than to be surprised down the line.

Attach your Brokerage Account to a Bank Account

You cannot invest in and trade penny stocks online unless you have money in your brokerage account. To make this as simple as possible, attach a bank account. This way you can make quick transfers in and out of your online account when need be.

Research your Options

There are hundreds upon hundreds of penny stocks that you can invest in. But just like all stocks, some are better than others. You need to do as much homework as you can before you begin to trade penny stocks online. If you jump on the first company that you see just because the numbers appear to be good, you may end up disappointed in the long run. Review charts to spot trends, speak with others who may have more experience than you, and read as much news as you can about the companies that you are going to invest in. Every nugget of information that you pick up is important.

Buy under $5

Although they are called penny stocks, you are going to invest more than a single penny. Instead, the term “penny stock” refers to a share that is trading for $5 or less. Since you are dealing in small numbers you have the ability to purchase more shares. In turn, if the stock begins to increase in value you are able to make a bundle in a short period of time.

Monitor your Investments throughout the Day

Investing in penny stocks is not something that you set and forget. If you are going to do this, you must be willing to monitor any movement throughout the day. This way you can buy and sell when it makes the most financial sense. If you do not monitor your investments you may miss out on the chance to earn a lot of money, or worse yet, lose more than you thought possible.

This advice should help when trading penny stocks online for the first time.  

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