How To Start Trading Penny Stocks
How to Start Trading Penny Stocks
Few basics you must know before trading penny stocks. How to start trading penny stocks is an easy question to answer, but no one can tell you if you will be successful at it. Below are a few steps that I deem will help you get started. First things first you will need a brokerage company, Cash ready to use, and your own due diligence.
Brokerage account: You can choose between those well known brokerage companies such as TD Ameritrade, Scottrade, Trade king etc… Copious of brokerage companies exist, it’s up to you to choose which one you want to use. I personally use TD Ameritrade because it allows to trade penny stocks as well as sub penny stocks and most importantly it provides a free level 2 (L2). Next, this company has no hidden fees; they only change $9.99 per trade, which means if you’re buying whatever amount of shares they only charge 9.99 for the transactions, same if you’re selling. I can’t say anything about the other brokerage companies because I have not used them, it is recommended to use different brokerage companies, but I prefer to use just one.
Amount available to trade: Don’t ever trade penny stocks or any stocks with an amount you cannot afford to lose. In other words, don’t use your lifesavings on trading penny stocks. Trading penny stocks is volatile that you can gain a lot of money in no time and you can lose it all in just a few seconds. If it is your first time trading, I recommend starting to test the penny stock market with no more than 2,000 dollars, anywhere between 500-2000 dollars is good. That if you’re serious about trading penny stocks.
Due Diligence: Do your own DD, always research about any stocks you want to trade in. There will be a lot of pumpers that will pressure you to buy the stocks they are trading; you will do no such thing. Stay away from newsletters, as they are being paid to promote the stocks they email you about. Not all of them are bad; sometimes a few of those newsletters companies offer a few good penny stocks once in a while. It’s ok to sign up to receive their penny stock picks, but your responsibility is to do your own due diligence (DD) and research anything you deem is good about such particular stock before considering trading it.