Thursday, February 4th, 2010
This brief article will provide you with information on how to buy penny stocks. It will also familiarize you with the language used by stock investors and provide access to additional information.
Penny stocks (aka; micro-cap and small-cap) are a common stock that trade for less than five dollars per share and are traded over the counter (OTC). Trading through OTC simply means that they are traded off-exchange, directly between two parties; you and the company selling the stock shares.
Small cap stocks are traded using quotation services like OTC Bulletin Board (OTCBB) or the Pink Sheets. These services are used to quote current trade prices for each stock.
Getting Started With Penny Stocks
Initially, your best investment will be time spent learning about the nature of micro-cap trading. Quality investor education material and information can be worth it’s weight in gold.
Next, you will want to find a good penny stock broker. Here are a few of the better brokers I have dealt with include Zecco, Low Trades, and Scottrade. All three offer great options for small, beginning investors.
Once your trading account is established, you will want to continue reading and learning. At this time, you should also consider doing some paper trades. Paper trading allows you to get a good feel for placing trade orders (picks) without risking any of your investment capital.
A lot of hype artist will try to convince you that penny stocks are some type of get rich quick scheme. Don’t believe it! Penny stocks represent a legitimate investment and require the same time and attention as regular stock investing.
While it is true that large fortunes have been made through micro cap investing – it’s the exception rather than the norm. That being said, you can still earn good income with the proper strategies and a small under $200 nest egg.
The big advantage with penny stocks is that you can generally realize greater returns on relatively small investments. Also, because the stocks can sell for pennies to a few dollars, it somewhat protects you against huge and potentially devastating losses.
While this introductory article gets you pointed in the right direction, be sure to investigate the links in the resource box. They will direct you valuable penny stock information and resources.
By: Calvin Merrick
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