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Information About Trading Penny Stocks Online for Beginners

People have been trading stocks online since the very early days of the internet, and if you’re going to get started in trading nowadays you go straight to an online broker.

There are several things you will want to be aware of before deciding to start trading stocks. IMO step 1 would be to watch the FREE video lessons for beginners and veterans wanting to learn from the start or have a refresher on the basics. You can find these by going to James Mason’sYouTube Channel. Then I strongly suggest utilizing a Paper Trading account to start, basically that is where you use fake money to test the knowledge you have learned.  If you need a list of brokers that offer this, just drop me a request in the comments.

There has been mounds of articles written about trading stock online, penny stocks, and by people that feel they no more than everyone. If you know so much and are so good, why not educate for free?

If the idea of an exciting investment strategy appeals to you, trading penny stocks could be the adrenaline fix you are wanting. It's simple to get started, but success or failure are equals.  This is another reason you will want to watch the Free Stock Course created by James Mason.

Penny stocks are defined as stocks that are trading below $5 a share. These are shares usually traded outside of the major exchanges, on the OTC Markets. They are often volatile, unpredictable and their performance is very difficult to monitor or evaluate future growth.

It is fair to say that stock trading at a few cents a share is a risky investment for anyone. The thought of buying thousands of shares for a few cents is one that often results in many people losing lots of money. What you must remember is that there is a reason the stock is so cheap - it really isn't worth much and the likelihood of making a killing on such shares is far from the foregone conclusion that some people will try to convince you it is. Establishing what the performance of these stocks will be is virtually impossible.

Don't be the one that just follows the hype into buying a stock just because a newsletter or email tells you it is a sure thing. There are plenty of sharks out there who will engage in the practice known as "pump and dump", whereby they will attempt to generate unsubstantiated hype about a stock in the hope that people will be a rush to buy, enabling them to sell on their worthless holdings to unsuspecting hopefuls. You must always exercise caution and do your own "due diligence" - if you don't, you will soon end up regretting the impulsive penny stock purchases.

Trading stocks online is not difficult, and once you have a basic understanding of how it works and decide to give it a try, you will need an account with an online stockbroker, i can provide some that i use if you request in the comments below.

Your interest in penny stocks tells me that you are looking to make quick returns. It is true that the rewards can be tremendous - it is entirely possible to make hundreds of dollars in a day. At the same time, get it wrong and the losses can soon mount up too. Day trading is not always profitable, but it's always risky. Day traders buy stock and aim to sell it on the same day for a profit - the age old buy low, sell high strategy. Of course, if the stock price falls, you have a decision to make - sell it at a loss, or hold on in the hope that prices will recover and you can mitigate your losses.

You must understand that not every stock you buy will grow in value during one trading day. This means you could end up with your risk capital tied up in one company, leaving you unable to make any other trades until you sell it. I suggest not having all your eggs in one basket is therefore not a great trading strategy.

For those that have limited funds to invest, this can present a bit of a dilemma. You will not want to buy just a few shares that even if the price rockets upward, you will make only a few dollars - you must also remember to subtract brokerage fees from overall profits too. If you are working with only a small amount of capital, you are going to need to find reasonably priced stock that allows you to buy a few hundred shares, certainly not less than 100. For example, if you can secure 300 shares and the price rises by 25 cents, you will get yourself only $75 less any commissions - hardly earth shattering. On the other hand, if the stock value increases by a dollar, you have $300. The basic math is simple enough, so you need to look carefully at whether an investment is likely to be worthwhile relative to the amount you can invest.

It goes without saying that the more investment capital you have, the more you stand to make, or lose.

Finally, I will repeat my earlier advice - never invest anything that you can't afford to lose. If you are thinking of day trading, you will need to be able to monitor your stocks throughout the trading day. If you are not going to be able to do this, you will not be able to sell when the need arises.

If you want to start trading penny stocks online, read up on the subject carefully and learn as much as you can. There are plenty of helpful websites such as Transparent Traders where you can begin to learn. 


  1. I am loving all the Penny Stock information coming through, its a nice add on to the Free Stock Course.

  2. Hey, good article, indeed I've though about not having a good ammount to invest then why doing it at all! Very interesting perspective definitely need to think better how to organize my schedule, it is also complicated to start trading while having a full time job! ��

  3. “pump and dump” hahaha! Great words, indeed there is a learning curve, after that its really manageable, and also you create your own process, steps, watch lists, etc.
    Favorite sentence “never invest anything that you can’t afford to lose” Feel like my life is changing thanks to you guys, so far I’m just over the practice step, can’t wait to really try, but I know that everything good comes with time and effort!

  4. For any new traders, make sure that you are aware of the company whose stock you're buying. Before you buy anything check out the background of the company and make sure it has solid foundations.