Online Penny Stock Trading

Finally, a site dedicated to providing quality information on penny stock trading rather than trying to sell you scams!

With Online Penny Stock Trading, we take a serious and professional look at the business of trading penny stocks. We do not promote stock picks or sell products related to the penny stock market. We examine and present the cold, hard facts, and provide leads to legitimate established brokers and references. If you are patient and diligent, this site can, in fact, help you understand how to make legitimate money.

Penny stock trading is not a means to “get rich quick”; it involves both serious work and serious risk. Please see the following index for help navigating this page. Each section will be more thoroughly explored with its own guide on this site.

What Is Penny Stock Trading

Penny stocks are issued over-the-counter (OTC) through institutions such as the OTCBB (over-the-counter bulletin board) and Pink Sheets. These are common stocks which lack market capitalization. Sometimes they’re brand new, but sometimes they’ve been de-listed from the stock exchanges.

Some people think penny stocks are traded thinly, however share volumes often exchange in the several hundred million range daily. Because of these millions of exchanges and low prices, this type of stock is often manipulated by organized promotion (or to put it simply, hype). This can be difficult to combat as often it is difficult to find verifiable information on penny stock companies.

Sometimes it is not the company itself that participates in this promotional manipulation but traders attempting to exploit the market through its volatility.

In the U.S. markets, the specific label “penny stock” refers, in a general sense, to stocks traded beyond the major stock exchanges (NYSE or NASDAQ).

But technically, the SEC (Securities and Exchange Commission) defines a penny stock (or micro cap stock) as a speculative low value certificate for a small company, regardless of its market capitalization and regardless of where it is traded.

How To Trade Penny Stocks

In this section we will provide a brief summary of the actual penny stock trading process. While it isn’t that difficult from a technical standpoint, you should evaluate a number of variables before you begin throwing your money into the delicate process.

For more details and some specific caution, please visit my full article on this topic: How To Trade Penny Stocks.

Trading penny stocks boils down to the following process:

Research the entire market and practice online paper trading before you even consider proceeding.
Open a stock trading account with an online stock broker. For more information on how to choose a broker read my article: Penny Stock Brokers.
Familiarize yourself with your broker’s specific conditions and terms, particularly their transaction fees.
Connect your bank account with your broker’s account. This can take a few days. I suggest keeping a separate bank account which you strictly use for penny stock trading.

Once you’re technically setup, you’ll need the following data to execute your trades:

Find out where the stock is traded. (NYSE? Pink Sheets? OTCBB?)
Know the stock’s ticker symbol.
Define the volume (the exact amount) of shares you want to buy.
In most cases you can save on fees by trading penny stock shares in multiples of one thousand.
Define your specific purchasing price.
IMPORTANT: Define your expiration date. This is how long you wish to hold your order open, or the last closing date on which you would accept this exact trade stock, price and volume.

In the opposite direction, you’ll use essentially the same penny stock data and same process while executing a penny stock trading limit order.

Again, for more details on this process please read my full article on How To Trade Penny Stocks.

Where To Buy Them

As you delve into the world of penny stock trading, you will discover organizations and services who offer to both pick your stocks and buy your stocks for you. Steer very clear of these kinds of services. Instead, purchase penny stocks through your established micro cap stock broker.

Again, please see my article on penny stock trading brokers for more detail, but you should generally find yourself trading penny stocks with familiar names, and always trade from your established online trading brokerage account. I also suggest reading an overview on how to consider different brokers in this article: Where to Buy Penny Stocks

Some common, trustworthy names you’ll come across include Vanguard, Charles Schwab, Fidelity, Scottrade, Sharebuilder, TD Ameritrade, Zecco, E*Trade. There are plenty of others of course, but these are the most established and trustworthy of the online penny stock brokers.

Yes, some of these major stock brokerages are more expensive then certain advertised services out there. But remember, we’re talking real money here, and there are plenty of scammers ready and willing to exploit the foolish and naive. So stick with well-known, reliable online stock brokers.

Fraud and Stock Promotion

In another article, I will go into much greater detail on the various known penny stock fraud schemes. But for now here are the most common penny stock fraud schemes: Pump and Dumpp, Chop Stock, Biased Recommendations (or Sponsored Picks… your friendly neighborhood “penny stock newsletter” probably engages in sponsored picks), and Offshore Brokers.

Before you abide by any advice provided to you, be sure the provider of this advice isn’t associated with any of these known penny stock manipulation schemes. For more on this financially delicate matter read my evolving penny stock fraud article.

Stock Trading Software

Penny stock trading software provides the essential tools you’ll need to research penny stocks, collect vital data and execute microcap stock trades. In some cases you may find application packages that also help you manage your brokerage accounts.

There are generally two flavors of stock trading software: all-in-one packages try to cover every possible functionality, and specialized packages, which focus on a single component and fulfill that purpose entirely.

Component software is usually more focused and more potent, while complete packages often lack versatility and appeal to the more casual traders.

In many cases these days, you can rely on your established penny stock broker to provide you with the services and software you need. However, if you plan to day trade penny stocks, especially aggressively, you may need to invest in some specialized applications.

Charting software is a common component application utilized by day traders to create a graphical representation of the data to assist them in making the necessary quick decisions involved in this type of trading.

I hope this article has given you a good overview of online penny stock trading. If you’ve really read this far, congratulations. You’re well on your way to learning the art and science of online penny stock trading.

The Thrill Of Identifying Undervalued High Potential Penny Stocks

While penny stocks often lure inexperienced investors with low entry prices and a high potential for dramatic returns, they also come with increased risk due to low liquidity and limited financial reporting. I hope to introduce you to methods for effectively balancing the risks and rewards associated with undervalued and high-potential penny stocks. Many people finding this guide will be looking for stock picks. If you approach any investing, especially penny stocks, in that manner, you will get burned. The truth is that you will likely get burned at some point, no matter your caution or experience. This certainty is why you shouldn’t invest what you can’t lose. I encourage you to review the Security and Exchange Commission Guidance on penny stocks. I’m sorry if I’m scaring you away. You have to go into this with a rigorous, skeptical mindset. Yes, you can find gold in these hills, but you must

The Thrill Of Identifying Undervalued High Potential Penny Stocks

Choosing A Stock Trading Strategy

If you want to be successful with investing or stock trading it is important to choose a stock trading strategy that fits your goals, your personality, your available time and your investing budget. Choosing the right strategy will help you enjoy this endeavor more and achieve greater success at it. To help you choose the right stretegy for you there are a few questions you may want to ask yourself. These questions will help you find direction. After answering these questions look over the strategies listed in this post to see which approach fits your answers to these questions and to find the one that feels like the best fit for your investing needs. There is no single best approach; this is a very personal process that needs to be individualized.

Choosing A Stock Trading Strategy

OTC Market

Interpreting the OTC Market is a crucial component of discerning how to buy penny stocks. A majority of penny stocks aren’t listed on a stock market like NASDAQ or the NYSE but instead on the OTC market (or OTC securities market). NASDAQ (National Association of Securities Dealers Automated Quotation) controls a little component of the over-the-counter market with the NASDAQ National Market (NNM), but this portion of the OTC Market doesn’t include penny stocks. Pink OTC Markets, at one time called the National Quotation Bureau (NQB) and colloquially referred to as “Pink Sheets”, operates on the most active component of the OTC market. If you begin earnest and extended penny stock trading, you’ll at some point deal in Pink Sheets.

OTC Market

You Need Information On Penny Stocks To Succeed

These days most people rely on search engines and the internet to do research. While this is a decent place to get some information, it doesn’t always provide the most complete or the most accurate information for everything — it really depends on your source and the subject matter. If you’re searching for accurate and detailed information about penny stock companies so you can make wise investments, it’s better to broaden your search beyond the internet, where there are too many sources of fraud and scams anyway. There are a few specific places you might want to reference before you put your money on the line. One good place to check is with the SEC. If the company files with the SEC they are making an attempt to look legitimate. Along the same lines you may also want to check with your state regulator as well as the state regulator for the state in which the company is located. This is often the first place complaints about a company or stock are registered; some complaints never leave this state level, so you may find out more by going directly to the state office.

You Need Information On Penny Stocks To Succeed

Will Higher Interest Rates Impact Stocks?

Interest rates have hit record lows and remained low for several years in an effort to help boost the economy, but increasing interest rates are likely at some point this year. As an investor you may wonder how this will affect stock prices and what types of stocks might look more promising in this scenario. Here are some things you should consider.

Will Higher Interest Rates Impact Stocks?