Where To Buy Penny Stocks

Knowing where to buy penny stocks is obviously a key component in trading and investing in them.  There are a couple of options when it comes to the way in which you buy these stocks.  You can buy penny stocks online, or if you prefer, through a broker.  Typically the easiest way to go about it is online trading, but if you prefer the guidance of a broker, then you'll have to first find one that deals in penny stocks, call him up, or visit his office, and then pay him a nice hefty fee for his services.  Oftentimes, if you're a penny stock investor, it means you are looking for a frugal way to invest in the stock market, which doesn't align with using an actual broker, which can be quite expensive.

This means, that as a frugal investor, you're going to want to go the cheapest route, which is an online broker.

Where to Buy Penny Stocks Online

Buying penny stocks online is a rather simple process. Most online brokers are going to have access to the markets where penny stocks are traded.

When referring to penny stocks, people go by various definitions. Some people believe that anything trading for under $5 is a penny stock, but really it has more to do with the specific exchange where they are traded. Penny stocks, at least for the purpose of this article, are stocks that are traded on OTC/BB, Pink Sheets or any over-the-counter market. They are typically stocks with very little daily volume, and that do indeed sell for only pennies each, sometimes even fractions of a penny.

That being said, as stated above, any broker that allows you to trade on these markets is a great place to get started trading these stocks. The most easily accessed market for penny stocks is going to be the OTC/BB, and most brokers are going to have access to this market. Common brokers include ETrade, TD Ameritrade, Zecco, Interactive Brokers, et al. These large brokers will let you trade penny stocks to your heart's content.

One thing you want to look for in a broker, if you're going to be trading pennies, is a flat fee per trade. For example, you want your trade to cost $9.99 whether you're trading 100 penny stocks, or 10,000. This is because, due to how cheap penny stocks are, you are typically going to be buying quite a few of them in order to make the most profit. If you care stuck paying for each stock you buy or sell, the fees can add up rather quickly, negating any profit you might have made.

While investingating where to buy penny stocks, you are also going to have to look into the risks involved.  They are considered to be amongst the riskiest investments out there.  This is because they are often attached to poor performing companies, or companies with bleak futures, and the prices of these stocks can often be manipulated in what's called a "pump and dump."  This is where a cheap and thinly traded stock is heavily promoted, which increases buyer interest which temporarily inflates the stock price.  The promoters quickly pull out from the stock when they've seen a significant gain, leaving everyone else holding the stock when it drops back to the price iit actually should be.

If you really feel you must invest in penny stocks, do plenty of research, and proceed with caution.