There are plenty of first time stock investors who do not even know how to buy stocks. Investing in a stock market is not really difficult, but this can really be very risky. That is why those first time investors are really recommended to study and learn the basic flow of stock investing, and they must also understand the stock market for beginners, and how it works. When we invest in a stock market, what we do is to trade stocks. In the financial market, trading of stocks is buying stocks or selling stocks.
Stock trading usually occurs on the exchange floor of the stock market, where the investor approaches a stock broker who will process the transaction for him. However, with the availability of the modern technology, we can now do stock trading through online. With this, a stock investor must open an account with an online stock broker, who will assist such investor in buying or selling of stocks. Thus, trading of stocks nowadays may be done in the comforts of our own home or office.
How to invest in penny stocks?
Perhaps we have already heard that a lot of people tend to invest in penny stocks, as these are the easiest to buy and fastest to own. Penny stocks are those stocks that are sold at a very cheap price of less than $5 per share; thus, they are also known as cheap stocks. Those people who plan to buy penny stocks must practice extra caution, as these stocks are not sold in major stock markets just like the regular stocks. Penny stocks may be found listed either in pink sheet markets and over-the-counter markets. Those stocks that are listed in pink sheet markets do not need to file their financial reports with the Securities and Exchange Commission, thus they are riskier to buy.
Investors who plan to buy penny stocks may either hire a discount brokerage or a full service brokerage to process the trading transactions. A discount brokerage is really cheap, but the investors who open an account with this type of brokers are expected to know a lot about stock investing, and they are also expected to know which penny stocks are best to buy. This is because discount brokerage do not offer financial nor investing advice to the investors.
Another way to buy penny stocks is through a full service brokerage. The full service brokers give stock buying guide to the investors, and help them decide which penny stocks are best to buy at the moment. This type of brokers give investment advice and suggestions on which are the hottest penny stocks to watch. With this, they are most recommended for the first time stock investors who do no have any experience about investing in penny stocks. Those who are not comfortable with their investing strategies may also opt to hire a full service broker to process their trading transactions, and assist them with managing their investment accounts. However, he full service brokers are more expensive when it comes to service fees and commission rates.