Penny Stocks Trading - How It Works And How Someone Can Make Big Profit Buying And Selling

By Eric Stein

Most of us know someone who has told us about that big stock winner. Many of these tales involve penny stocks. Penny stocks trading is ubiquitous on the Internet today. Gurus, website and even a stock picking robot claim to know the secrets to trading low priced stocks.

Prior to following an expert's advice, you should always perform your own research on penny stocks. Penny stocks can be defined as stocks that trade for less than $5.00 per share, or below $3.00. Some experts consider penny stocks to only be those that trade below $1.00 per share.

Why are these low priced stocks so popular with traders. It is due to their low price and the small amount of capital required to enter into a trade. The possibility for high percentage gains are greater. If you buy a stock for $100 and it goes up $2.00, you have a 2% gain. If you buy a stock for $2.00 and it goes up only $1.00, you have a 50% gain.

You can find hundreds of websites and experts offering penny stock picks for a fee. There are some who will send you free picks. You can also find a local trader or possibly a friend who trades these cheaper stocks to help you learn ways to trade. If you decide to subscribe to a service, see if you can get a free trial first as this allow you to see the picks in action and to see if they are any good!

Researching past performance and understanding the trader's philosophy is important before you use someone's picks. Penny shares can be a roller coaster ride, and you need to be able to follow them consistently and closely to make money. Getting in at the right time, watching them go up, and then selling them for a profit is exhilarating.

Most online brokers permit low priced stocks to be traded. However, watch out for extra fees on low prices shares. Some brokers do not like to deal with these cheap stocks and they may charge you for trading over 1000 shares or 10,000 shares. With low priced stocks, you will often trade large lots and these fees can subtract from your profits.

Buying and selling low priced stocks is an affordable way to enter the stock market. Penny stocks trading can also be quite lucrative and profitable. You can start with a small amount of capital and minimize the risk on each trade. Huge gains are possible with penny stocks! - 32163

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