All this time, most article lifting how to invest in penny stock like to repeat a similar theme. It usually discusses the broker, steps to trade, risks, and several considerations. Today, it will leave those all or only talk some of them in a glance. On the other hands, how to invest in penny stocks strategy also discusses the scammers and fraud. Definitely, it is so important to know because penny stock is almost full of the new players. So, they are very possible to get fraud because their experience is still lack.
Complete Guide How to Invest in Penny Stocks in 5 Steps
In trading penny stock, you actually only need two methods is that learning and avoiding the scammers. Meanwhile, the learning method has 5 steps to do. The steps include how to find and invest in penny stocks such as below:
1. Conduct a Research
The penny stocks are very tempting for everyone both the newcomers and seniors. However, many fake companies emerge there with a smooth package and very deceptive. Thus, you must assure that the company which you, meet is real. Conduct due diligence and see the profile of the company before spending some money on them.
2. Select your Broker
When you open your laptop and internet, you will see a lot of online brokers to buy. Investing in penny stocks must be really smart in selecting the broker. Precisely, you choose a broker which does not give additional fee. Usually, the additional fee making the stock expensive. E-Trade, TD Ameritrade, and Tradestation are the common brokers in penny stocks.
3. Decide the stock that you want to trade
If you want to trade your stock, you can visit the Finviz or OTC Markets platform web. Through OTC, you can determine the potential of your successful and decide which stock you want to trade. You can do it easily because OTC manages the securities to the tiered market.
4. Begin to Trade
Finally, you will start to trade but you must assure that you convenient losing your money. In penny stock trading, you might lose a part or potential to all.
5. Join the Daily Trading Chatroom
Do not play alone because there are many chatrooms that you can join inside. They will help you with sharing their experience during trading in penny stocks. Even, you are going to find the mentor which is really willing to lead you to win. Surely, this step helps you to avoid mistakes that they ever did.
Common Traps and 5 Tips to avoid the Penny Stocks Scam
Absolutely, there are numerous considerations outside the transactional free, volatile, volume, and others. One thing that you must remember that you are the target of the fraud in trading penny stocks. They might offer a very cheap rate for their penny stock but it is not real. Opposite of that, you will lose much money in seconds or minutes. Therefore, it is extremely essential to know 3 common traps which the scam often do:
• Long-term averaging techniques
The broker recommends you to keep accumulating your $1 in each price reduction. After the stock takes a positive turn, as if, they give you an unpredictable profit. Remember, knowing the general fraud is one of the tricks on how to invest in penny stocks for beginners.
• Pump and Dump Schemes
Be careful to find a promotor offering good tips (at the cover) for you. They usually say that they can access information from the insider to inflate the price. If you follow the tips, of course, you will end with high-cost investment. Apparently, they are attempting to offload the earlier purchased low-cost lot at a high profit.
• Short and Distort
By the way, the Short & Distort is another type of the Pump and Dump. Even though, it works in vice versa wherein the promotor sell the stock at a high price. However, they spread a negative issue about the stock to lower the price. It sounds cheaper than the prior price, indeed, but they actually are releasing their position in a big profit.
Well, those are 3 common frauds from the scam companies or promotors. Here, you really must be careful because this cheap penny stock is the field of the frauds. On the other hands, there are a lot of aspects making penny stocks risk for this crime. It is such as the volatile character, cheap cost, many beginners, and so on. Do not worry because you have passed many steps on how to invest in penny stocks and make money. Now, it is time to overcome them through 5 tricks below:
1. Be careful toward the promotors offering a high claim with low-cost. Most of them are the scam promotors.
2. Pay attention to the charming illegal promotion on the internet or enter your email address.
3. Do not directly believe when there is a promotor claiming as the insider. As if, they want to guide you to the multi-bagger penny stock.
4. You might get a calling through the broker’s telemarketing offering open and fair marketing.
5. Be careful when you look for tips on online forum or newsletter. Do not let you get them with the vaguely labels but give a lot of recommendation.
3 Essential Consideration for Foreign Investors
Hopefully, you are more ready to run how to invest in penny stocks online also face the scammers. It turns out, there is additional information for you or the foreign investors. Although the information is extremely essential, not all people know it. So, it becomes the trigger to make a big mistake in trading. To perfect your purpose, let’s perceive 3 following important consideration:
• Thinking about Forex markup fees wherein it increases trading frees.
• It turns out the foreign currency has a role in the trading of penny stock.
• Trading your penny stock with the foreign investor increases the risk. It may happen when you get a case and must overcome it. The resolution fee is more expensive and not run fluently. It is because the investor must involve the foreign authorities to get the resolution.
Eventually, your adventure to find the complete guide on how to invest in penny stock is over. You get the simple effective steps to trade, face the frauds, and get additional information. Hopefully, you understand these all and start to trade soon. Good luck!