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There are some basics you require to understand before you learn how to trade penny stocks. You require to comprehend that this is a profession with rampant fraud and tons of manipulation. You must appreciate that any kind of genuine stock trading is a serious company involving genuine danger with real money. In this article, I will explain the basic actions you require to master to execute a penny stock trade.

Choose A Trustworthy Broker

First up you require to select a broker. The best known on-line stock brokers are probably TD Ameritrade, Scottrade and E*Trade with Sharebuilder gaining steam. However, just because they're the most popular does not imply they are the very best brokers for your scenario.

However you choose your broker, be very, very careful you choose an established and trustworthy broker and not some kind of obscure deal maker you discover online. It is not uncommon for savvy investors to take advantage of novice investors, especially in the area of penny stocks. So stick with established, recognized entities.

Your Investing Capital

The next major step -- and the step that indicates you really imply company -- is to connect your bank account with your broker account. I urge you to setup a separate bank account from your primary checking and savings accounts for your penny stock trading. I also encourage you to not start trading till you have significant capital separate from living expenses in your trading account.

Executing the Trade

Now prepare the following info for your broker to execute the trade. Initial, discover the quotation service where your broker can determine the stock. For example, is it on NASDAQ or is in the Pink Sheets? Subsequent, define for him the stock's ticker symbol within its listing service. Then you must specify the exact amount (or "volume") of the share you want to purchase. Maintain in mind that regardless of the term penny stocks, you will most likely need to purchase in multiples of a thousand shares to keep the brokerage charges affordable.

Now describe your precise buying price and the expiration date for that cost. Occasionally, particularly with penny stocks, purchasing a share isn't an instantaneous procedure. The expiration date defines for your broker how lengthy he ought to keep the order active. Once that date hits, your order expires. This tends to make it so you don't accidentally purchase a dated stock which you might not want anymore. And then when you sell, you use a limit order to sell.

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