There are plenty of stock market investors who prefer to buy penny stocks, because these are generally cheap at $5 per share. Thus, many individuals can own plenty of penny stocks at once even with small capital. Buying stocks would mean that a person will trade stocks, and this usually happens on the exchange floor of the stock market or through online trading.
A lot of investors prefer to trade online because this is believed to be the faster and easier way to trade. Before any one buys any type of stocks, it is essential that they are aware of the basic flow of the stock market business. Learning the basics about the stock market for beginners is really essential in making the right decisions that will lead to better profits later on.
Where to Buy Penny Stocks?
Penny stocks are not traded in major stock markets, just as the regular stocks. These stocks are usually listed in over-the-counter (OTC) markets and ink sheet markets. Buying penny stocks in pink sheet markets is believed to be rather riskier, because the stocks that are listed in this market are not required to file their financial reports with the Securities and Exchange Commission (SEC). Therefore, extra caution must always be practiced.
How to Buy Penny Stocks?
Knowing how to buy stocks, especially penny stocks, is necessary in order to get started with this kind of investment. Like buying regular stocks, two major ways to buy penny stocks are through discount brokerage and full service brokerage. Obviously, choosing a discount brokerage is rather recommended for those people who want to cut off their investment costs and minimize their expenses.
The discount brokerage is very cheap when it comes to their commission rates and service fees. However, when a person decides to open an account with a discount brokerage firm, it is expected that he already knows what he is doing, and he also knows how to choose which penny stocks to buy. The discount brokerage just process the actual purchase of the stocks, and they do not give any advice on which stocks are best to buy — therefore, discount brokers are not recommended for the first time investors.
Another way to buy penny stocks is through a full service broker, which is ideal for the first time penny stock investors and those who are not too confident in choosing which penny stocks to watch and buy. Opening an account with a full service brokerage would mean that the investor will use a broker that offers financial advice and stock buying guide, and so, this broker charge even bigger amount of service fees and commission rates. The investor just needs to tell the broker how many shares he wishes to buy, how much he is willing to pay for these, and the ticker symbol of the stocks. Then the brokers will attempt to buy these stocks for them. In addition, this type of brokers will also help the investors manage their accounts for them.
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