Cheap Online Penny Stock Brokers

If you’re looking for information on where to buy penny stocks, the answer is actually much easier than you might think. They are definitely not the most “orthodox” investment vehicle out there today, but the appeal of low priced shares is indeed universal. These companies trade at a very low price per share, usually below $5.00 per share. Researching the top penny stock brokers is a frustrating task.

The companies represented by these stocks are known as “microcap” companies, because they normally have a market capitalization (or, total overall value) below $10 million. Although many people consider them to be a to be the “Wild Wild West” of the stock market, spectacular gains can be realized, but as we all know, leverage is a two-edged sword. The small company that can yield you 300% in a matter of weeks can also drop like a hot rock in that same amount of time (or even shorter), and leave you puzzled, until you visit this website

The reason why such high leverage can be easily attained is because of the low price per share. It takes much less of a drastic move for a stock trading at 10 cents per share to move to 15 cents per share (a 50% move), than for a heavyweight stock such as Google or (some similar “blue chip”) trading at around $400.00 per share to move to $600.00 per share. Notice, it’s the same percentage move, but for a blue chip to move in such a dramatic fashion it’s going to be a much longer haul than the move for a penny share. The volatility of small cap stocks is something that not every investor can stomach, so it’s always good to know your own threshold for pain, and your personal tolerance for risk (i.e., your “Uncle point”).

Truly if you even think about buying penny shares, you better plan for the best and prepare for the worst. You have to be willing to kiss that money goodbye and not even shed a tear if you want to step into the world of trading on Wall Street. Because of their risk nature, penny stocks are not a long-term investment. You have to realize that these kind of stocks are more for the aggressive, speculative short-term trader, not the Warren Buffet-style long-term value investor.

Now for some specifics on where to buy these stocks. You will of necessity need to have an online brokerage account, preferably with such reputable brokers as Scottrade, E-Trade, TD Ameritrade, or Zecco. Most of these brokers have good deals on commissions and fees, and the required minimum deposits to open an account are relatively small. Many of them require no more than a $2,000 minimum initial deposit to get started, and several of them require significantly less. Once you have established your brokerage account (after a quick application submission involving some boring paperwork and then a quick funds transfer), you are permitted to trade basically any stocks you want to. Most brokerage accounts are more lenient towards long trades, but will normally require some type of deposit to stay on hand for short trades.

But, in the case of small caps, it is a much more common thing in the investment world to go long  rather than short, given the small prices per share. As far as the actual exchanges that carry otc stocks, they mainly trade  Over-the-Counter Bulletin Board, known as the OTC-BB. Also well-known on the list is the National Association of Securities Dealers Automated Quotations, also known as NASDAQ. These two exchanges are the most common exchanges, but the New York Stock Exchange (NYSE) every now and then will have some stocks that loosely qualify as penny stocks.

The best way to select  stocks out of the thousands that are available is by using a stock screener, which is available on both the NASDAQ and the OTCBB websites. Sort the stocks by price, and also include volume statistics. The other search criteria (P/E ratio, etc.) are really pretty much useless; just stick with the basics.

You can sort by percentage gain or price gain, most active by volume, and other criteria to help you select the right investment for you. As with any other investment vehicle, it is always a good idea to do thorough research before laying down any money for trading.

Can You Become a Penny Stock Millionaire?

Yes it can be done, traders such as Tim Grittani, Tim Sykes and John Bell have all become wealthy using their own day trading penny stock strategy. Their stories have been covered in Bloomberg and on CNN. Just to recap your memory, all stocks under $5.00 are considered penny stocks, companies under $1.00 are called micro-cap and under $0.25 are called sub-pennies.

People have started with $1000, $500, $100 and even $50 and turned it into a fortune, just by playing the gutter of Wall Street. For every millionaire, thousands of investors have wiped pot their accounts. The key is to sell when a profit has been realized. If you invest $100 and the stock increases 100%, you have just made $100 profit (minus broker commissions) So if your commission is $10.00 you would have realized a $80 profit.

Now another way to do this is to wait for the share price to increase 120%, this way you have a profit of $120, minus the broker fees, you realize a profit of $100. You could also wait for the 120% increase, sell half of your shares, then reinvest the $120, minus the brokers fee and do it all over again. This leaves you invested with $100 of the original shares which at this point is all profit until you sell, yes again with the broker fee.

The biggest key to success, is don’t get greedy, don’t wait for it to go higher unless things look really good and you have that gut feeling and the stats show it will climb. Cut your losses short and let winners ride. The best thing to do if you want to try this is to sell after a 100% profit and then find the next stock you think will be a winner.

If you take $100 and follow these steps and you find the right stocks at the right time and sell when you are suppose to it can be done. $100 turns into $200, then $400, then $800, $1600 – $3200 – $6400 – $12,800 – $25,600 – $51,200 – $102,400 – $204,800 – $409,600 – $819,200 – $1,638,400. Wow looks easy Huh? Hard part is, could you invest the whole $819,200 into one tiny company? Probably not, that would take nerves and you most like would have the volume trading to buy in.

What would have to be done is to invest that capital into multiple small businesses and control each one as you did in the beginning. Point is, yes it can be done with a lot of research on every enterprise you look at and buying at the right time and selling at the right time.