Investing in a stock market is one of the most popular trends nowadays. As a matter of fact, a lot of people invest in stocks even though they know the risks that involve in such. The stock market is such a fickle business, thus, those people who are planning to invest in this type of investment must be knowledgeable about the basics on stock market investing and they must also be brave enough to take such risks, and wise enough to know what to do when these risks arise.
Most often than not, a stock broker is required in order to process the trading of stocks — especially when trading is done online. In order to find the cheapest online broker available, stock investors need to shop around for various stock brokerage firms and make a stock broker list so that they can do a comparative analysis on a variety of stock brokers and their corresponding commission rates and service fees. Obviously, hiring those that offer the best rates and lowest fees — while at the same time offering an excellent and reliable customer service — is the wisest thing to do.
Investing in penny stocks
Some stock market investors take the risk and still buy penny stocks even though this type of stocks are rather riskier to invest into. This is because penny stocks are worth less than $5 per share, thus, owning a great number of shares is made possible, even if the investors do not have plenty of money as capital. These stocks are not sold in major sock markets, just like the regular stocks. These stocks are usually sold in pink sheet markets and over-the-counter markets. Usually, penny stocks may be bought through discount brokerage or full service brokerage.
Full Service Brokerage
A full service brokerage is more recommended for the first time penny stock investors, and those who are not too confident in penny stock investing. The stock investors will need to inform his broker how many shares of stocks he wishes to buy, and how much he is willing to pay for this. Then the penny stock broker will try to purchase such stocks in behalf of the investor. The stock broker will make money through a commission per transaction — this is still different from the stock broker salary that they receive. Sometimes, a stock broker gets paid through principle transactions, which means that the brokers would make money on the difference between the bid price and asking price, also known as the spread.
This type of broker is advantageous for the first time investors because they give investing advice and help them manage their investment accounts. Although this type of brokers can really be expensive.
Creating an account with an online penny stock discount brokerage may also be chosen as an option. The discount penny stock brokers are more affordable, as their commission rates are relatively low. However, they do not offer advice;l thus, those people who hire discount brokers are expected to know what they are doing and which penny stocks to buy.