If the idea of buying hundreds of shares of stocks for less than $1,000 sounds appealing to your stock market investing dreams, then penny stocks is what will make it possible to do such a thing. This is where a number of different stocks are traded for less than a $1 for each share and many of them actually sell for less than $5 to $10 per share. Doing this though can be pretty risky but on the other hand they can also be pretty rewarding too.
If you think you’d like to do something like this then you will need to figure out how much of your portfolio that you want to dedicate to buying these penny stocks. Remember, these kinds of stocks can be very risky so make sure to limit your exposure to them.
Go out and read a copy of a financial publication like Investor’s Business Daily or the Wall Street Journal and check out the stock tables. Most of the penny stocks will be traded on the over the counter or OTC market but some do trade on the major exchanges so keep an eye out for that.
After you have done this you should log into your brokerage account or open one up online if you don’t already have one. You should choose a low cost Internet broker because this is a good way to cut down on the commissions paid out to the broker and it lets you put more of your own money to work for you.
Once you have your account active you should use the different stock screening tools that are available on the broker website to help you identify the stocks that are less than a $1 per share. You also might want to consider the ones that are selling for less than $5 or $10 as well.
After you have finished with this you will need to go to the trading menu on the website and enter the ticker symbol of the stock that you are interested in buying. Then you can enter the amount of shares that you want to buy. Simply verify all of your information and then go ahead and submit your order.
Once this is done you simply watch the prices of the penny stocks that you bought. Understand that these stocks will tend to be very volatile and if you keep close tabs on them you could end up picking up a really quick profit when the share prices spike. But in order to do so you must watch the prices very closely in order to react fast enough to to reap the benefits.
Final Note: As with any stock, never spend more money than you are willing to lose.