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When most people think of investing they think of buying shares in large companies like Microsoft or Google. Shares in these companies cost from $30-$300 each. For less than the cost of one share of a big company you can own 1,000's of shares of penny stocks. Reasons for trading these small companies include: 1. Low Cost - Small company shares tend to trade for a few pennies to less than a penny. When making trades on 1,000's of shares worth in total less than $50 you have the potential to double, triple, or even higher returns in a few days or hours. Big companies never have the potential to increase in value by such large percentages. 2. Few Trades - Since there are less owners of tiny stocks the share value fluctuates greatly with a relatively small number of shares traded. If you hold large quantities of these tiny companies you can virtually move the price yourself. This can also work as a negative since when buying the company share you should buy in small 1,000 share lots so you do not drive up the price before selling. 3. Low Trading Fees - The cost of a trade is so low I wonder how the brokerage companies make any profits. There are so many discount brokers to choose from that charge less than $5/trade. Ten years ago trades cost $50 and higher. 4. High Potential Profit - Very few stocks can move as fast and by such a large percentage as thinly traded small companies. It is very common for these companies to double in a matter of days but the downside is they also fall in value just as fast which is why you need to have stop loss orders. 5. Stop Loss Orders - Since these tiny companies go up and down in price so fast it is very important to have stop loss orders in the event of a sudden decrease in value. Stop loss orders are preset sell orders that activate a sale at a predetermined lower price which prevent you from having large losses while you let the winners ride higher. Trading stocks for a living is a great way to become wealthy but when starting out you should seek professional penny stock picking advice.
Now that you understand the reasons why and how to trade penny stocks you will need to get professional penny stock advice. http://www.pennystockpicks4u.info
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==== ==== Please check out Trading Pro Edge System for great tips on Stock Market Trading for Profit. www.tradingproedgsystem.com ==== ====