Buying Penny Stocks

A List Of Penny Stocks

Buying penny stocks seem to be easy to do and in a sense it is, but the hard part is trying to pick the right ones to make a profit. There are many sites out there in the internet world that offer you a list of penny stocks and all you have to do is give them your e-mail.

If you really think about it for a minute, why is someone that you never met and most likely never will, want to give you a list of penny stocks that he recommends for no charge? What a great guy that he would want to help total strangers make money in the stock market and do it at no cost to you.

Because in a sales pitch like stock trading you have to give away something to get the person to see if you know what you’re talking about. Trading in penny stocks is big money for brokers and the houses they work for.Why is it that penny stocks seem to be a big thing within the stock market? Well actually they’re not as big as you may think in regards to owning the shares. The smart money ( the pros of Wall Street) don’t buy and sell penny stocks, there’s too much risk involved. Instead if they want to get into a company that has it’s shares at penny stock levels, they’ll actually loan them the money with interest.

They may seem like a big thing to you and others that you may speak with, but not when it comes to the smart money on Wall Street. It’s the amateur trader and the day trader that wants to trade in penny stocks on a regular basis. The reason for that is that they have the reputation of having big percentage gains (or losses) in any given day. You can make (or lose) a load boat load of money real quick.

If you’re looking to get a list of penny stocks and plan on buying and selling them, be careful, it can cost a lot more than just a few pennies.

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Are You Buying Penny Stocks Of Big Companies?

With today’s economic turmoil, some of the big companies are starting to look like penny stocks. In the last few months we are seeing some of the big boys losing so much value that their price per share has dropped below $5. What does that mean for you in regards to buying penny stocks, trading and making some big gains?

In the auto industry we now see General Motors (NYSE:GM) and Ford (NYSE:F) trading in the $3 range. GM hasn’t seen these levels since 1943. In January 1999 they were trading at $87 per share and in the beginning of this year (2008) they were at $19. Now eleven months later they are on the verge of bankruptcy and trading at just $3 per share.

Ford is in the simular situation, they were at their all time high of $37 per share in March 1998 and are now trading at less than $2 per share.

Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) the two government sponsored mortgage brokers have also lost 98% of their valus since the beginning of this year.

American International Group (NYSE:AIG) were just saved by the government after losing 97% of their value.

For all intent and purpose, these stocks can now be classified as penny stocks. Many traders, especially the newbies and amateurs trade penny stocks for a couple of reasons. One, the price per share is cheap and two, penny stocks typically have the tendency to jump big when refer to as percentage gainers.

Do you really want to start trading these companies that I’ve listed? The answer should be no, but I’m sure quite a few of you guys and gals out there are already do so. I will tell you that these companies as well as their stocks are broken. They are all leading companies that help build this country, but because of bad business practices are now in big trouble of going away for good.

So if you want to trade these penny stocks, go right ahead, but don’t say I didn’t warn you.

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Buying Penny Stocks Online

When you’re buying penny stocks online it’s not much different than when you buy stock that are valued much higher. A stock is considered a penny stock when it value is less than $5. Most of them are not traded on the Dow or the Nasdaq, although some may be listed on those exchanges, but typically you will find them on the OTCBB ( over the counter bulletin board.

Like I said there are many that are listed on the big board, most of them are alternative energy companies that are trying to hit it big. When you want to buy penny stocks online there are many places that you can go.

The one that I like the most is TD Ameritrade, a online broker that I’ve used for some time now. Their customer service is beyond great, which is to me the most important part of choosing a online broker. Since I’ve used them for so long and so much for my trades, I now pay only $7 a trade no matter how many share I decide to puchase.

Zecco is another company that is out there to use. They offer you 10 free trades per month with a $2500 minimum equity balance, after that it’s $4.50 per trade. their customer service is not as good as Ameritrade, but they do have a community board where you can talk to other traders for ideas (rule #1- there’s no such thing as a good stock tip).

Another company that I’ve not used is Scottrade. They charge $7 per trade, but they do have a lot of other fees that are listed on their site for other services that they provide. I never used them because of that reason. I feel that if you are there to provide a service of trading stocks, then that is where that only charge should be.

If you look on the internet for an online broker, you will find that there are many more, but do your research on these companies before using any of them.

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