Stock that has a low price is a penny stock. Several investors trade small cap stocks due its minimal price. An alternative source of income can be trading in penny stocks. However, trading in micro cap stocks can even lead to losses. Investing in penny shares require three things cash, broker and information.
The steps to trade penny stocks online are:
Selection of Broker
There are a number of online stockbrokers that trade in penny stocks. An investor can select full service or discount brokers. Visit different broker websites to check their services and fees. After thorough research open a trading account with a broker.
Transfer of Money
The money should be transferred to the stockbrokers account so that investor can buy stocks from the over the exchange counter. The transfer of money can be done through checks, wire transfers and Internet banking services.
Selection of stocks
There are various websites where lots of information is provided on penny stock investment. Online stockbrokers also give recommendation on the purchase and sale of penny stocks. After a proper research select few stocks that needs to be traded.
Select the penny stocks to be bought. Enter the stock’s trading symbol in the stockbroker’s online trading platform and buy the stock.
Monitor the stock performance
The stocks should be monitored on a regular basis. When the price has moved up the position should be squared off by selling the selling the small cap stocks. If the stock price is declining the stock should be sold by limiting the loss.
Penny shares bought online from brokers are safe and profitable. Online trading helps in minimizing the loss by selling your own stock and not waiting for the broker to sell on your behalf. An investor can actively participate in the market by trading online.