Day Trading Penny Stocks For Profits

Looking to start day trading as an extra income or as a full time career? It is possible, but before you jump head first into this, instead of trying to day trade stocks in the major leagues like the NYSE and NASDAQ, start out by day trading penny stocks.

Why day trade penny stocks? You will be able to start your trading on a much smaller level until you learn to make money on a consistent basis. Can you imagine trying to day trade 5 shares of Apple? By looking at penny stocks, it gives you a chance to get a feel for the market without having to commit large amounts of money.

Penny stocks are generally regarded as stocks that trade for less than $5 a share. So technically a penny stock can be a dollar stock. You can find several stocks on the major exchanges that are under $5 a share to trade.

There are other markets where you can trade day trade penny stocks. These markets are known as the Pink Sheets and the OTCC. You can also find stocks on the NASDAQ Small Cap Market. These are typically stocks that trade above $1 a share.

Penny stocks are known as small cap stocks. They are companies that are worth less than 50 million dollars. These can be companies that were once large cap stocks that have lost value. Usually they are brand new companies that have come on to the market.

Day trading penny stocks can be very risky if you don’t know what you are doing. The key to investing profitably is to do good research. Buying and sell penny stocks on heresy or tips will lead you to the poor house quick.

If you’re just starting to invest in penny stock, you should read all you can on the market. You will find many online newsletters you can try out for free or for a trial subscription. Using these services will help bring you up to speed as to what is happening in the market.

Read several of them and see which one fits the way you’d like to trade. By reading and following these services, you can check how their recommendations are doing. Subscribe to no more than 5 for a month. With these services in hand, paper trade for the month. Paper trading means not investing actual cash in the market but “practicing”. This is a great way to follow a market before committing your cash into it.

You should record what your buy price and sell price are based on the newsletters recommendations. Do they make sense? More importantly were they profitable?

After paper trading for a month, you can set up a stock account with an online broker. OptionsXpress is one. Another one is Sharebuilder, which charges only about $4 per trade. This is a huge savings on commissions. Even better, they allow you to open an account for just $100. This would be a great way to begin to day trade penny stocks.

There you have a beginners guide to day trading penny stocks. Read some more, research some more before jumping in.