Buying Penny Stocks
The very first thing you should know before you buy 1 share, is that penny stocks are the riskiest of equity investments. Due to their low price, many new investors are attracted to penny stocks thinking its an easy way to make money, but like most things, if its too good to be true, it probably is.
Like any other investment vehicle, you need to have a plan before you start buying penny stocks.
Define your risk tolerance, how much can you afford to lose?
Define your entry and exits, where will you take profit? Where will you take a loss if it turns against you?
Stick to your strategy!
Most importantly, educate yourself before you begin investing with real money. Before you place a real trade, try “paper trading” or pretend trading. Write down on a piece of paper the price at which you buy particular stocks, and how many shares you bought, then track them over a period of a month to see how you would do if you were trading real money.
We recommend the following brokers for buying penny stocks:
Scottrade
Zeeco
E-Trade
Ameritrade