Despite the misleading hype you may find on the Internet, trading penny stocks online may be more risky than trading normal stocks. This is not a get-rich-quick scenario and if you treat it as such you could very well suffer the consequences.
Penny stocks are traded via something called an Over-the-Counter Bulletin Board — often simplified as the OTCBB — or perhaps via Pink Sheets. The low value of these stocks indicates either brand new corporations or corporatations which are in a struggle to survive. New companies sold on these boards haven’t yet proven themselves ready to be traded on the NYSE or NASDAQ. Older companies traded as penny stocks may have been penalized and removed from those major exchanges.
Using this list and the brief descriptions of the best online brokers can help you find the right broker to fit your needs. Since Day Trading Penny Stocks focuses on independent trading of penny stocks, I emphasize brokers that provide cheap online trading. However, I will also provide some full service brokers (which usually cost a bit more) for comparison’s sake.
It’s important to note the broker you choose can have a big impact on your overall stock trading experience. Some brokers offer more services and tools while other brokers offer limited tools and services but cheaper trades. It’s good to evaluate all of these things as you are choosing the best online broker for your needs. For some people cheap trades are more important, and for others the services and tools are more important. It’s a very personal decision that can impact your profits in this market. Continue reading