How to Buy Penny Stocks Online

Stock that is usually traded for under $5 are known as penny stocks, they are stocks that are normal bought when undervalued and sold when their value increases giving a good return to an investor. To buy penny stocks you will not look to the stock exchanges to purchase them but you find them sold over-the-counter (OTC), usually an agent who is known as a broker will facilitate the purchase and sale on behalf of the investor. Most penny stock investors are fully knowledgeable on this area of investment. Brokers usually charge commission for their part in the transactions that take place daily; however some brokers will work on principle transactions, which means that the broker will make money on the spread. By buying and selling at advantages times the broker will cover his commission, and probably make more in the process. The difference between bid and asking price of penny stocks is known as the spread. The spread can be 25% up to as much as 100% and more. Outside bid and ask and inside bid are two terms that refers to penny stocks ask and bid prices, there are usually two of each. Usually it is the outside bid and ask that is of the greatest interest. Brokers hold penny stocks in their account for a period of time, take some of the risk that is involved with the market price fluctuations, this is termed mark up pricing.  This is the procedure too buy penny stocks Online:1.    A bank account is required, computer with internet access, a reasonably good knowledge of computer software.  And a working knowledge of browsing and researching on the WWW. 2.    In your research you can look for a broker that does not ask for a minimum deposit.  If you are on a tight budget then this is the route to go to begin with, it’s not necessary to have a starting capital with a brokerage account.  3.    Ensure that you have Set limits to how much you wish to use for trading, set your limits to the amount you can afford to lose, another good tip is to keep your investment money separate from you daily account. 4.    Information on stock trading  is freely available on the internet and you need not lay out hundreds of dollars to access it, its is freely available form Big Charts.com or MSN.com both these sites offer sufficient information on the various aspects of trading, an excellent way to get well informed. 5.    Search out forums and newsletters that give out information on penny stocks, tips on where one can buy, how to go about buying, and a many other tips on trading in penny stocks. Take opportunity to learn how to watch trends in market trading of penny stocks especially the ones you are interested in, this will help you decide on when to sell. 6.    Knowledge is power and becoming au fait enough to show you are no longer a total greenhorn, then you need to find a reliable broker who will work with you, and be happy to spend time discussing trading and maybe even offer the advice free.  Once you have your account opened and set up you can begin you investment journey and buy penny stocks online. The recipe to buy penny stocks online is to open a bank account, open a broker account, gain as much knowledge as possible about penny stocks, buy stocks, sell and reap the benefits of this interesting aspect of trading.