How To Trade Penny Stock? Very Carefully
"Penny stock" is an old term that still hangs on, even though there is no longer any such thing as a stock share costing only one penny. Penny stock refers to any stock that costs less than $5 (US) per share. These stocks are so cheap for a reason - the companies are incredibly huge risks to invest in. How to trade penny stock? Very carefully. It is about the highest risk stock available legally.
No Shortcuts
Although you may read a lot of advertisements claiming how to trade penny stock with a minimum of effort, don't you believe it. How to trade penny stock requires the same amount of diligence and effort to learn as any other skill. You will not become an expert overnight, or even within the first year of trading. You will probably learn how to split an atom a lot faster than learning how to trade penny stock profitably.
Patience Is A Virtue
The best way to learn how to trade penny stock is by doing it. You can read "how to" articles and e-books until you go blind, but there is nothing like the actual experience of playing the penny stock market to really make you learn what to do and what not to do. Keep in mind that when you make a bid for a penny stock, there may be a considerable lag time in having your order filled.
Mistakes Are A Learning Experience
Before you begin to make your first bid on your first penny stock, you need to look at mistakes in a whole new way. Mistakes in the penny stock market are unavoidable. Don't waste time blaming yourself for being stupid. Look on these mistakes as a learning experience. Also, since you know you are going to make mistakes, only put a portion of your money into penny stocks. Don't sink it all into penny stocks!
Finding Them
You won't find much about the companies funded by penny stocks on the big stock market papers like NASDAQ or the New York Stock Exchange. In order to find out the latest on penny stocks, you need to look at two other sources, The Pink Sheets and the Over the Counter Bulletin Board Stocks (OTCBB). Pink Sheet penny stocks are not required to be registered with the SEC (Securities and Exchanges Commission). Therefore, they are considered to be a much riskier investment than penny stocks listed in the OTCBB.
