If you’ve always wanted to play the stock market but weren’t sure how to do so, there are ways to get started. If you’ve seen the movie The Wolf of Wall Street, you’ll know that the main character made a lot of money by initially selling penny stocks.
What you might not know is that penny stock investing is still a thing today. But you need to know how to approach it and get a good understanding before fully diving in.
Get ready to learn a thing or two about the penny stock trade and getting your feet wet.
Understand Penny Stock Investing
Penny stock investing involves buying and selling a stock that is under a certain dollar amount, usually under $5. Because people don’t need to have a lot of money up front, this makes it easy for them to get started.
Rather than trading with the big boys, many penny stocks are managed through groups such as OTC Markets Groups. While it’s not what most folks envision when talking about stocks, it makes it possible to trade them this way, since they can’t be put on the regular market with the DOW and other household names, due to the low value of the penny stock.
Know Your Options
Options vary when it comes to using penny stocks. Instead of getting large names you’re likely used to, you’ll trade smaller. This can make it easier to reap the value in the long run, but remember to adjust your expectations accordingly.
Some of the names you’ll see on the penny stock market include:
- Destination Maternity Corp.
- Stein Mart
- Sage Stores
You won’t be completely devoid of brand names, and can even find good companies you’d be interested in working with. Just know what you’re looking for and do some research before investing your pennies (or dollars).
Learning the Tricks of the Trade
While trading can be exciting, it’s important not to get your hopes up and expect your life to turn out like that of Leonardo DiCaprio’s character. Investing in penny stocks is not a way to instant riches, so don’t start planning on purchasing a mansion yet.
If you’re making a return of 20% or more within a short time after buying, sell quickly. If you don’t, the penny stocks can take a downfall and leave you broke.
Also, look for stocks that have high volumes to get the most bang for your buck.
Have you already played penny stocks and want to step up your game? Check out this post on five new stocks to watch for.
Taking advantage of penny stock investing can be a great way to make some money and learn about playing the stock market. This is helpful if you’re not ready yet, but want to learn more about how you can make money through investments and understand the ever-changing market.Check out our other posts on business and investing, and see if you’re making the right choices for your investment needs.