Essentials of Trading Penny Stocks

People who are looking to trade in on penny stock market might be thinking how to trade the penny stocks. Not like standard stocks, all these are not been traded in stock exchange, however in over-the-counter market. You will need to hire broker in order to perform your deals, both buying or selling shares. Basic thing that you need to ensure is having enough money in account that you are making use of to cover both share cost & broker's commission and fee.

Among best methods of trading a penny stocks is looking at an so-called pink-sheet web site. Know your penny stock's ticker sign and which market that stock is positioned in. While dealing with the penny stocks, you must buy and sell shares in very large amount, multiple by thousand, for example, or else you might end up paying additional money to the broker in commission.

Also it is helpful to know following tips if you decide which type of penny stock you have to trade.

First, search about company and see how they are doing. Penny stock companies are very fresh & are still to make some sales in market. Find if they are earning money, and how many products that they are selling on daily basis as well as their plan to make their consumers happy & returning.

Second, look in how company is earning their money or are they selling any advertisements or products or offering different services or do they have any stores or a website?

Third, delve in a trend of their marketplace. Is it on rise and find if products and services that they are selling are famous. Learn about the competitors as well.

Fourth, know how huge is the company debt by looking in their quarterly reports online. Having huge debt charges lots of money and can potentially cause company to close & stock values may sink to zero.

Fifth, focus on the news stories. Good news story regarding company might possibly send stock price to sky.

You would as well have to decide & tell the broker whether penny stocks order of yours is limit order or market order. So called market order is order where you are ready to pay whatever your market price is for that shares you like. Alternatively, for limit order, you need to specify limiting price, which must be attained for your order in order to get executed.

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