When Buying Penny Stocks Keep Your Eyes Wide Open

Category : Penny Stocks

Penny stock trading is not only about what to look for when buying penny stocks its also about what to avoid when buying these stocks. When buying penny stocks you will begin reading and screening for certain types of stock whether your looking for sectors, strong balance sheets, solid share structure or break through products. While researching these types of companies you will have to keep your eye out for red flags as the penny share market is a historically corrupt trading area.

Before you buy any stock you should watch and learn how the market works and the fluctuations within the market. Find stocks you like, even ones you don't like and follow them, watch how the market trades the stocks. Ensure that you read as much as you can about trading stocks, about your company and how to buy at the right price through charting. Some brokers don't even allow the trading of penny stocks as it is so dangerous, etrade and tdameritrade are both brokers that allow you to buy these stocks. There are many more brokers, but those are the two I have used personally. These brokers will also have information on your companies, you can find the information through their websites or via phone.

Once you find a company, read all about it, even simple things like how many employees. If a company has 3 employees and they're supposedly engaged in some heavy complicated work, then the company could be a sham. Ensure that the company doesn't have a history of reverse splits, if it does, you could buy shares and have the company reverse split on you again. The biggest problem for new penny stock traders is buying into the hype of a stock and failing to learn about the company when a cursory glance would've revealed a history of hyping, dumping and reverse splitting.

Trading in this market can be dangerous, I know some traders who will not buy the most talked about stocks. The bottom line is to read about what your trading and not in the forums where everyone has a fake name and will say anything. Read about the pros and cons of trading otcbb stocks.

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