If you want to learn how to invest in penny stocks , it can be an exciting journey for you to pursue. These are highly attractive stocks to many people who are looking for a way to get into the stock market and make a killing. These stocks are issued (typically but not always) by small companies who need money for expanding their enterprise. You can buy a whole lot of stock for less than $100 and you can see your profits rise dramatically in less than a single day. The bad news, however, is this: these stocks don’t trade on the major exchanges and are, thus, highly speculative; and they are prone to wild price fluctuations. including the possibility of losing you a ton of money in a single day, too.

Still, if you’re excited about learning how to invest in penny stocks maybe this is the best way for you get started. You do, however, want to make sure that you follow some very important basics without question, or else you’ll become one among the numerous penny stock trader failures out there.

For your first bit of knowledge, penny stocks are bought and sold for you the same way as any other stock on any other exchange: through penny stock brokers. This is federal law. So, you’ll begin by assiduously researching penny stock brokerage houses on the Internet. Leave no stone unturned as you research them, and always look for clarity, transparency, and lots of good recommendations for any brokerage that you research. Among the most highly touted are Scottrade. TD Ameritrade. and the Sharebuilder program of ING. so even if you don’t end up going with them at least check them out and learn their business practices and their fee structures so that you have a hallmark against which to compare other brokers that you look up.

Another important strategy to follow as you learn how to invest: penny stocks should never be bought with the hopes of getting rich quick. This can happen, in a way, but when you are starting out you start small. Do not risk too much money. Do not buy too much of one stock. Do not let greed get the best of you so that you hold on to a penny stock with a rising price for too long. These are short-term investments because they are so volatile. If you buy a stock for $0.80 a share in the morning and it’s at $1.20 a share in that afternoon, sell it and take your profits! Don’t hold it hoping to see it go to $2 or $3 a share or something like that.

Finally, as you get better at knowing how to invest in penny stocks you should still not hold more than 10% of your total investment portfolio in these investments. They are just too speculative and volatile for you to rely on as your sole source of investment income. Have some penny stocks, some e-minis, some futures, and so on. Be smart, be disciplined, and be prosperous with penny stocks !