How to Trade Penny Stocks on the NYSE
If you have been in the penny stocks trading business for a while then you surely must have heard of the term ‘Penny stocks’. What are they, and how can you trade them? Well, to start, a penny stock is a stock that trades for less than $5. Now that may sound like something of a bargain, but it is not exactly what it sounds like.
To begin with, these types of stocks are very vulnerable to manipulation and even used for fraud. They usually fall into the anti-corporate niche, or they are traded by scammers looking to make a quick buck. The reality is that only a few brokers will actually offer you penny stocks that are genuine. You need to find a broker that can be trusted. This is where some research of your own comes in handy.
If you want to trade penny stocks, there are a few rules that you need to follow. One thing that you should remember is that you should never invest large sums of money into small cap stocks unless you have a significant success rate. It is not worth the risk, even if they can pay off tenfold in the long run.
Another thing that you must do is that you must always have a margin account. This is one account that you take a loan out from a broker or financial institution to trade in the stocks. You are borrowing money against the value of your shares, so this is why you must have a margin account.
Now that we know all of that, let us look at how you can go about buying penny stocks. The best way is to start by opening an account with a penny stocks brokerage firm. You do this by becoming a member. You will have to pay a fee for this service, but it will be well worth it. You get access to their research, which will give you a good idea of what penny stocks are really doing. You also have the opportunity to put up some money as a sort of collateral, if you happen to lose a bet.
Since there are no commissions involved and you can open an account for as little as $500, it makes sense to do just that. Many people are intimidated by the prospect of investing so far over the top of their means. It can seem like you’ll never make any profits, but if you learn the tricks of the trade and learn how to manage your risk, then you will. When you eventually get into the stock market, you’ll be glad that you made the investment and avoided the huge risks.