How to purchase penny stocks online

Written by allen young
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How to purchase penny stocks online
(Penny Stock Black & White image by Magical Art from Fotolia.com)

Purchasing penny stocks online can be very profitable, but confusing. This article will guide you through the process of buying penny stocks online.

Skill level:
Easy

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Instructions

  1. 1

    Get information on penny stocks to buy. Information on penny stocks may be scarce. Try contacting a broker to get a prospectus to find more information on companies with penny stocks. Look online on Securities and Exchange Commission filings on the companies you are interested in.

  2. 2

    Call and talk to the company directly to get the financial statements. You may also be able to talk to someone who is most knowledgeable about the company.

  3. 3

    Open a brokerage account to buy penny stocks. There are a lot of online brokers you can choose from with low commission rates.

  4. 4

    Invest only a small amount into each penny stock and diversify among several to reduce the risk.

  5. 5

    Use a limit order when placing a trade for a penny stock. Penny stocks are often very thinly traded and the price you get may vary greatly. Using a limit order reduces the risk of a big price change when you place an order.

Tips and warnings

  • Understand the risks of penny stocks. Penny stocks are high-risk investments with often little information and very little liquidity. Trade penny stocks only with money you can afford to lose.
  • Beware of high-pressure sales tactics from brokers. There are a lot of online scams with penny stocks.

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