Buying Penny Stocks
So to start off, if you plan to trade penny stocks in the stock market, you must first need a trading account with a stock market broker. The trading account must at least have the minimum amount in order for you to buy shares. Take note however that whenever you buy or sell a stock, your broker will get a commission fee. That is how they get paid, thru the different fees and commissions. The method of trading penny stocks is quite easy for new investors, all you need to do is find the right shares, hold on to your investments and sell them at much higher price. But the main key here is to find a stockbroker that fits your needs and trading requirements.
To give your more information on how to find the right stockbroker, we must first need to discuss the two types in the market today, full service broker and discount broker. Full service brokers provide a lot of information for the investors giving investment tips, newsletters and other useful data that can help you find undervalued and hot penny stocks. But they mostly prefer corporate clients than individual investors, and their commission fees are a bit expensive. On the other hand, however, discount stockbrokers give better services for investor. Most brokers have online trading capabilities giving the investor more control over their trades; this method of transaction costs less and will be easier to manage. Having a discount broker can save you high stock commissions for penny stock trading.
Looking for stock broker can be very confusing, as new investor may not know where to start, so to make life easier, here are 3 major points to consider when looking for a broker.
The first thing you need to do is to check how much the broker charges for commission and other fees. If you plan to actively trade penny stocks, try to get brokers that have minimal fees. Some stockbrokers have fees as low as $5 per trade, so try to get those.
Next on the list is the level of reliability and support that your stockbroker can provide. This is something you should first check if you plan to trade online. There will be times when the trading website can have errors or can lag down making it difficult to execute trades. It is best to find a dependable online broker that has professional service background.
The last point you need to consider is the trading speed and the execution of your orders. You need to get a stockbroker that is fast in dealing trades. The accuracy and timing uf your orders should be placed instantly, since the penny stocks are volatile, making the wrong trade at the wrong time can harm your investment value.
Investing in undervalued shares or penny stocks presents a whole new way of making money off the stock market. They are cheap and easy to trade with. Some penny stocks trade for $5 or less, making it easy to buy more volume and to profit from. But every trade and profit that you make also depends on what kind of stockbroker you have. Remember that a good stockbroker helps you make money, while a bad stock broker just charges high commissions for their profit. This can make or break your trades.