When Should I Invest in Penny Stocks?

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If you have an interest in the stock market, you probably find the popular penny stock trading very attractive due to the potential for a high return on your investment. Before starting to trade these kinds of stocks, there are many things you should look into, including the timing of your purchases and when to buy stocks.

It is important prior to beginning penny stock trading that you have saved up a substantial amount of money to work with. Although penny stocks are very appealing to investors due to their low cost (the SEC defines penny stocks as stocks that are less than $ 5 per stock per share), many of these stocks are losing their value due to events like business outsourcing companies.

You'll also want the ability to buy and sell these stocks at a moment's notice, and you won't have time to move funds into your brokerage account at that point, so it's important to start your penny stock trading when you're financially comfortable doing that. You also have to make a big decision before you start investing in penny stocks, whether or not to use a broker / advisor to help you decide which stocks to invest in, or whether to use an online site to do so yourself. Every way of trading has advantages.

You have to pay a percentage to the broker as their commission by using a broker, but you get the benefit of running your ideas by an experienced professional who can help you maneuver through the frequently false information on these stocks. But by using an online site, you typically pay a flat fee and wind up paying less to do your business.The timing of your purchases will be important if you want to move forward trading penny stocks on your own using an online site. Trading through a site that will give you timing recommendations and what stocks are hot is a good idea. Although you can not count on this information to make anything concrete, you will at least have some guidance on how to choose the right penny stocks.