Most people want to invest in penny stocks even though they know that this type of stocks is much riskier than the regular stocks. Penny stocks are those stocks that are sold at a very cheap price of less than $5 per share; thus, many investors can own plenty of shares easily, even though they do not have plenty of money as capital. Penny stocks are not sold in major stock markets just like the regular stocks. These are sold through over-the-counter (OTC) markets or pink sheet markets. However, not like the stocks that are listed in over-the-counter markets, those that are listed in pink sheet markets are not required to file their financial reports with the Securities and Exchange Commission (SEC), thus, they are much riskier to invest into; and so extra caution and prudence need to be practiced.
How to buy penny stocks?
Just like the regular stocks, penny stocks may be bought with the assistance of some stock brokerage firms, such as the discount brokerage firms and full service brokerage firms. These penny stock brokers will generally do the actual purchase of stocks according to the instruction or orders of the investors. With a discount brokerage firm, the investors may make trades right away with little effort. But the investors are expected to know which stocks to buy, as the discount brokers do not offer advice on which stocks to buy. The main advantage of a discount brokers is that they are very cheap when it comes to their service fees and commission rates.
Using a full service brokerage is more ideal and recommended for the first time investors who do not know which stocks to buy. They offer investment advice and make suggestions on which penny stocks are best to buy at the moment. They also help the investors manage their accounts. The drawback, however, is that full service brokers are more expensive when it comes to commission rates and service fees, thus the investors need to spend more for such investment costs and expenses.
Hiring an online broker
Penny stocks may also be bought through the assistance of online penny stock brokers. In order to find the cheapest online broker available, the investors need to shop around and get a stock broker list of several brokerage firms, and compare their rates and fees as well. Making sure that they hire those who offer the best rates and lowest fees will generally help them minimize their expenses and investment costs, and maximize profits as well. The investors also need to read a variety of customer reviews and feedbacks about the brokers, and find out whether or not such brokers will be capable of handling or managing their investment accounts.
How much is the stock broker salary?
If you are wondering how much a stock broker makes, usually, they make money either through a commission per transaction or through principle transactions — which means that they make money on the difference between the bid price and ask price, which is known as the spread.