Start Trading Penny Stocks

There are very few requirements to start trading in penny stocks. It can be broken down into three main things.

1.Money:

The money we are talking about is not just the money that is sitting in your bank account. It is not the money that you use to pay for your rent, your car or your food. Penny stocks can be extremely unpredictable and you although you might make a great deal of money it is also true that may lose everything, so it is important especially when you are starting out with penny stocks that you only use money that you can afford to lose.

This is not a reason to cap your investment but just a sensible precaution. When you have made your first profit you can then start, after the proper research, to invest in penny stocks on a larger scale. The point is really to keep your investment fund separate from your money for everyday household expenses. That way if your investment does go bad, and occasionally they do you will not be too badly affected. And if you think you have learned by your mistakes and want to try investing in penny stocks again, all you need do is to save a little fund to work with and of you go again, with no great harm done, other than your pride of course!

2. Knowledge:

This is without a doubt the single most important factor in determining whether your budding career as a penny stocks investor will be a spectacular triumph or a dismal failure. If you are a newcomer to investing of any kind there are various guides you can buy and it is a good idea to read several of these before spending any money.

These are all good and although they will not help you with specific decisions such as whether to buy a particular penny stock, or when to sell, they give you a good background on how it all works and are invaluable in building a good knowledge base.

There are also many useful, and some not so useful, websites around that can help you both with the initial "learning how penny stocks work" and also with current prices, market movements etc.

Lastly and probably the most useful of all is to try and find a friend or even a friend of a friend who is willing to give you a few pointers on investing in penny stocks. A few hours, (and possibly the price of a good meal) spent getting advice from someone who has experience of the highs and lows of trading penny stocks and who is not trying to sell you anything, is possibly the best investment you could make to help you get started.

3. Finding a Broker

There are many brokers around (just look in the phone book to see how many) but how do you decide which one?

Traditional brokers with offices are much more accessible and better if you want to sit down and talk things over, but they are usually expensive and unless you are trading large amounts, probably beyond you price range. Online discount brokers are a good alternative for the small investor as they have much lower fees and being online it is very straightforward to log in to your account and check how the market is doing. A good amount of research it necessary as there are a great many of these and you should find one that suits you and whose site you find easy to use and if you can get a recommendation from someone you trust then so much the better.

Now you have got all the major elements in place you are set for the roller coaster ride that is the world of investing in penny stocks But remember that knowledge is the most powerful tool you have to make your penny stocks successful so start learning today.

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