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How to Buy Penny Stocks

How To Buy Penny Stocks
To start investing in penny stocks, you need to have an account set up with an investment brokerage house. Then your account needs to have sufficient funds to purchase the penny stocks that you’re interested in. Each time you make a trade (An order to sell or buy shares), your broker will charge you a fee or commission. The process of trading penny stocks is quite straightforward. The key is finding the right stockbroker to execute your penny stock trades.

Finding The Right Stockbroker
There are two types of stockbrokers, full service and discount. Full service brokers offer investment advice and usually puts emphasis on larger more established corporate entities such as Citibank and Johnson and Johnson. Their commissions could easily run in the hundreds of dollars. The services provided by these stockbrokers do not come cheap.

Discount Brokers
For investing in penny stocks, the best venue would be discount brokers that provide online trading. The reasoning is having an online trading account gives you access to low costs trading. To be profitable in trading penny stocks, you need to control your expenses. A penny stock investment can only amount to a couple of hundreds of dollars. You don’t want the stock commissions to eclipse your investing in penny stocks. Here’s what to look for in an online discount broker:

1. Commissions: This is one of the major considerations in choosing a discount stock broker especially if you’re active in penny stock trading. Some online discount stock brokers advertise commissions as low as $5.
2. Reliability and Customer Support: Besides price, having a discount online broker that is reliable is vital. Their web site can go down and errors can occur. The key is their accessibility by phone or e-mail and how quick they act on correcting errors. To successfully execute penny stock trades, you want a discount broker who’s online trading system is reasonably dependable. For comfort of mind, you always want to be dealing with client representatives who are courteous and professional.
3. Speed Of Trade Execution: You want a discount stock broker who will execute your penny stock order in a timely and quick manner. This is particularly important if the penny stock of interest is volatile.

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