Buy Penny Stocks
Are you looking to buy penny stocks? If you are, make sure you know the condition of the company before you buy any shares. Yes there are penny stocks out there that you can make a quick gain in a short period of time and in some cases, in just a few hours.
But where to go to find the latest hot stock to make money. Well there are many different websites that offer to send stock alerts to your e-mail. These websites are nothing but a bunch of penny stock chasers. These websites (not all of them) are known to use what is referred to as a “pump-n-dump. A practice that has been used for many decades, but that is for another post.
I’ve use some of these sites to do research on the accuracy of their picks. I’ve found that in most cases, stock stock in question will go up in value by more than 10% to 50%. The problem is that the price per share won’t stay there for long. The early investors who got in on the stock before the herd start selling their shares which in turn bring the price per share down trapping the average investor in the stock or having them take a loss.
If you’re able to be home or in the office watching the stock streamer all day, you can capitalize on the situation. If you’re not able to do that, I suggest you stay away from trading in these stocks.
If you’re looking to make money on the next big growth stock, you need to find the company that will bring the next best product to the market that the industry is looking for. Right now there are plenty of alternative energy companies out there that are just about to explode. Start doing research into many of these companies to see if they have what it takes to go to the next level. Once you do, build a position in the company’s stock. The buy-and-hold strategy will pay off in the long haul if your research is correct.
In my opinion, if you’re new to the stock market and don’t have a total grasp of it all (or at least most of it), I say stay away from trading or investing on penny stocks. You can make a lot of money, but you can lose just as much if not more of your capital.
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How To Buy Penny Stocks
I’ve been asked many times for advice on how to buy penny stocks. Is it any different than buying a Blue Chip stock? My answer to that is yes, there is a big difference between the two.
When I start looking into a small-cap company, especially one whose stock price is less than a $1.00, the research that I need to do is much more involved because the lack of analysts and other resources I would use to get my information. a few times I’ve called the company to talk with the the CEO (Chief Executive Officer) or the CFO (Chief Financial Officer) to get a feel of the management and their confidence in the direction of the company. You would be surprised how much they’re willing to talk to potential investors. Go visit their website to get their latest financial report. You’ll also need to look at their competitors within their industry as well as their potential market share.
If you’re wondering about how to buy penny stocks where you can get rich overnight, be advise that those stories you hear are mostly from these “pump-and-dump” website or brokers. Yes you can make good money if you’re quick enough to buy and sell stock (in most cases) within the same day. I’ve seen too many times from beginners investing in penny stocks see the gains, but wait too long before the Profit-takers have already sold out their position. If you are someone who can not be around the computer all day while the stock market is opened, then you shouldn’t be thinking in this type of stock trading strategy.
Another thing you have to keep in mind is not to put too much capital into a penny stock that you are not prepared to lose. So often investors will lose 75% or more of their investment in a penny stock. As with any investment strategy, you should never put all of your capital into any one sector or stock. All stocks rise and fall in value and when it comes to penny stocks, their price swings are drastic.
If you’re asking about how to buy penny stocks as in, Where do you find a penny stock broker? There are many different online penny stock brokers that you can use. These days it’s a lot easier to trade online than ever before. TD Ameritrade, Zecco, and Scottrade are just a few you can use, but make sure you read their list of fees they charge for stocks that trade for under $1.00. There are some that will have extra fees to when trading penny stocks. I wrote a earlier post about the difference between some of your choices.
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Penny Stock Brokers
Are you wondering which of the many penny stock brokers out there should you use when buying penny stocks? There are many choices available to you. In this post, I’ll list a few for you to choose from.
It’s no longer like it was back in the days when you had to deal with a small brokerage firm to be able to trade penny stocks and accept whatever fee they were going to charge you. Even in the beginning of the online stock brokers, you weren’t able to trade but a few stocks valued under $1.00 and to trade sub-penny stocks (< $0.01) was out of the question. Today most of the popular online brokers like, TD Ameritrade, Scottrade, Zecco and E-Trade will take orders for penny stocks.
So the question is, which one? In my opinion, I prefer to use TD Ameritrade. They were recommended to me by a friend and I’m glad I did. I have also dealt with E-Trade as well, but the tools and the customer service I receive from TD Ameritrade surpasses E-trade, so now I only use them. Their fees per trade ($9.95) are more on the higher end than their competitors, but since I do so many trades per year, when I mentioned that I was thinking of going somewhere else, they lowered the fee for all of my accounts to just $7.00 per trade no matter how many shares I purchase.
Scotttrade is just as good as TD Ameritrade with their tools, but from a few traders I talk to say their customer service leaves something to be desired. Their transaction fee is less than TD Ameritrade at just $7.00 per trade. but for trading penny stocks they charge an extra fee. They refer to it as a Low Price Stock Fee. Scottrade will charge ½% for stocks under $1.
For those of you who have your own Stock market software, you might not need to use one of the mentioned websites. So in that case you need to look at Zecco. This online stock broker only charges $4.50 per trade, no matter the size. They also have the least amount (actually none) of fees. Zecco doesn’t have a minimum balance requirement either. Great for investors who are starting out with a small portfolio. Zecco also offers 10 free trades per month providing you do a certain amount of trades per month.
There are so many that I really can’t list them all here in this one post. Look for yourself and you will see more choices than you were really looking for. Everyone is different and so are their lives, so you are the only one that can make this decision for you. Most of these penny stock brokers applications will only take you ten minutes to fill out and transferring money is easy too.
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