How To Find Penny Stocks The term penny stocks was used historically to refer to stocks that traded for less than a dollar, however the SEC (Securities And Exchange Commission) revised the definition and included shares that trade below $5. How great is that? So, you may be wondering “How do I trade penny stocks?” Here are a few important steps about how to trade penny stocks, just read on and find out how easy it is. When you are not willing to gamble your hard earned money or do not have much to spare, investing in penny stocks is the right choice for you. The turnaround time for these investments is very quick, and you can monitor the day’s biggest winners and losers easily. Follow these steps for a successful investment. 1. Go online and observe which stocks are “most active” and “biggest gainers” on the NASDAQ, AMEX, or NYSE. Look for stocks that are trading around the $1.00 range. 2. Dig in and look for companies that trade penny stocks which interest you. Click on the stock symbol to view the charts or go directly to the companies’ website. 3. When trading penny stocks it is wise to trade online by creating an account with an online brokerage firm, because they are less expensive compared with local brokers. Also, there are some companies that offer direct purchase options. Make use of these options because it can help you avoid brokerage fees. To do this, you have to go to the company’s website and printout the stock purchase form or ask for it to be mailed to you. Study the requirements, especially the minimum purchase, fill it out and attach your payment using a certified check then mail it back to the company. 4. It is advised that when trading in penny stocks, to purchase stocks from several companies. Never put all your eggs in one basket, as they say. You will never know for sure which of these companies will succeed. Investing in penny stocks is both fun and exciting, but always remember there are risks involved. Investing in stocks is like gambling; you can never be sure if you are going to lose or win, so do not risk more that you are willing to lose. As stated above, penny stocks are stocks that trade for less than $5 per share, they are also referred to as micro cap stocks. Keep in mind that these penny stocks are from companies that have just started or companies that have been hit by “bad times”; including but not limited to bankruptcy or product recall. Even big companies can become penny stocks or may have started as such. If you invest in these NASDAQ penny stocks and watch the company grow, then huge profits are yours for the taking.