Do You Know How to Pick Penny Stocks?

You may not yet have added penny shares to your portfolio because you heard that they were scary and maybe a little dangerous and simply may not know how to pick penny stocks. But, did you know that some of the household names that you know today were once penny stocks? The definition of a penny stock is one that trades (on a regular basis) for less than $5.00 per share, so these are shares in legitimate companies. If you know how to pick penny stocks, you can make an awful lot of money.



After the huge drop in the DOW last year and then the bounce back late in the year, people are a little frightened about investing in the stock market. It seems the gains you make one day can be wiped out the next if you do not know what you are doing. Gone are the days of buying a stock and holding it for years and years, and now people are in and out of many stocks in virtually minutes.



Imagine if you had bought Microsoft when it was a penny share thirty years ago. You would have made an absolute fortune. And, plenty of people did because they did their research on the company, saw the vision of the future and know how to pick penny stocks. You can learn how to do it, too.



There are many keys to knowing how to pick penny stocks to invest in, and the first one should be to watch out for a scam. There are plenty of brokers and traders out there who like to talk up a useless stock, have you invest in it, and then they cash out the profits, leaving you with a bunch of stock that is worthless. Knowing how to recognize those types of situations is vital if you are going to start trading in micro stocks.



Once you have learned how to pick penny stocks, avoid the bad ones, and learn when to cash out of the good ones, then you need to make sure you are working with a broker who will allow you to trade them. There are some penny stocks that are traded on the over the counter bulletin board or in the pink sheets that are not traded in some traditional online brokerages.



Many online stock brokers refuse to trade in any stock you choose and may try to limit your portfolio to penny shares they are more comfortable with, this may not necessarily be in your best interest. You should also watch out for online stock broker fees, since sometimes although your selected stock may rise in value, in reality you will not walk away in profit after paying your broker. So, check to make sure you have the full ability to trade all types of stocks. You can make a lot of money right now if you know how to pick penny stocks to invest in the right way.



If you are new to the world of stocks or specifically over the counter trading (OTCBB), you may want to delve a little deeper into the world of how to pick penny stocks. You should really have some tools and resources available to you. I have learned the hard way that it is better to learn form an experienced trader before jumping in deep with big investments. To learn more check out this penny stocks recommendations site.

To your continued trading gains,

Dustin



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