Aug 17: The Cents of It All: Online Penny Stock Trading

by David Jenyns on August 17, 2006

Online penny stock trading is quickly become very popular because it’s an inexpensive and fun way to experience the thrill of a stock market and allows you the chance to still make a large profit. There are various web sites that offer the fun of online penny stock trading to consumers for a small fee. Most web sites offer advice and decent privacy policies to their traders, to the world of stock trading on the internet can be comfortable.

Many will tell the story of how Microsoft and Xerox started out as low-trading penny stocks on the market and ended up being million dollar stock traded industries. There are also numerous horrors stories and stock scams. Most web sites tell you that the truth of online penny stock trading falls between the extremes and you are likely to be reasonably successful but shouldn’t have huge aspirations to come from your penny stock trading.

A “penny stock” is an inexpensive stock, not necessarily a stock that costs one penny.

Generally, a penny stock is a stock that sells for fewer than five dollars and is fairly easy to trade and move. Lots of penny stocks are even under a dollar. Most penny stocks are listed on the major exchanges, making them easy to track and monitor yourself so checking your stocks can be a skill that can be learned through the trading of these stocks.

In fact, any stock that trades under five dollars is considered a penny stock. Investing in these stocks can be fun, educational, and risky. Online penny stock trading is a growing option for stock traders because of the normally low risk stocks that are involved, however there have been huge losses reported from trading or playing around with penny stocks. Care must be taken to ensure that your stocks are reliable and that you do not get in “over your head”.

Some tips to follow when trading stocks: first, believe in the press stories. This doesn’t mean that everything the press reports is true but rather that if a company is being discussed it is probably popular and going to do reasonably well at the moment. Second, diversify your stock portfolio to include all kinds of stocks, not just penny stocks. This is important due to the relative unreliability of the stock market as a whole. Online penny stock trading can either be your pathway to millions or your road to ruin; the choice is yours.

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