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Penny Stock Trading-How’s it Done?

If you’re reading this blog post is because you’re either want to start trading or you’re looking for a route to invest your money. Either way it’s good start for you because not too many people know the importance of investing. That’s the right way to go as investing your money is one of the best ways to make this money grow.

Although there’re countless number of paths you can choose to invest your money into, penny stock trading is one of the most used ones because of many reasons.

 

What are penny stocks in the first place?

 

Usually something’s name would give you an idea as of what this “thing” is about; however, penny stock does not really describe this market.

Penny stock is any stock that’s trading at $5 or bellow. You see what I meant? It does not have to be trading at a penny in order to be called a penny stock. In fact stocks that are traded at a penny are the ones you should try to stay way from.

 

Those stocks that are trading at a penny are so dangerous because they’re prone to manipulations. They’re manipulated as a way to get attraction and increase their volume of people who are buying shares. Moreover, those manipulators are shareholders as well. It’s illegal to do something as such, but they do it to make lots of money. An increase in volume often comes with an increase in price; once the price is increased those manipulators would sell all their shares to get the profit leaving those who did not know with the bad baggage. This scheme is called pump and dump.

 

Luckily, if you know what you’re doing you’ll never fall prey to a pump and dump’s stock. For this reason it’s very important that you educate yourself prior to start trading. Talking about penny stock’s education, the Penny Stock Traders site has this post written about the most important things to know in stock trading.

 

Penny stock is where you can make money quicker and it’s also where you can lose your money the quickest. High profit’s potential always comes with high risk. It’s the same thing for penny stocks.

 

To start trading stock you’ll first need to educate yourself. I’m telling you that from my experience, because I’ve had some bad experiences in my early years of trading. I could’ve easily saved a lot of money from my losses. Don’t make that same mistake; educate yourself about this market first.

 

Secondly, you’ll need to register with an online broker. The online broker is like the middle man; that’s the path you take to execute your trades. There’re many brokers available, each one of them has its pros and cons. You’ll have to do your research to find which one suits you the most.

 

Once you have the broker ready you’ll have to fund your account. You can either send a check to your broker, you can wire transfer your money, you can also connect your bank account to your broker’s account. It will be up to you to choose how you’d want to do that. After that you’re reading to start trading and make money.