They are typically issued by small, less-established companies. Be aware of the downside, too. Penny stocks are not very liquid, meaning there may not be much demand for them, and as a stockholder, you could have trouble finding a buyer, should you want to sell your shares. In addition, the issuers of cheap stock may suffer from a weak market position and a fragile financial profile, making them risky investments. In order to buy stocks, you need the assistance of a stockbroker who is licensed to purchase securities on your behalf.
What is considered a penny stock really depends with whom you are dealing. It is easy to open an account with them, and then it is simply a matter of giving them your buy and sell orders. This can be done online with most discount brokers, which is the method that I highly recommended. What is the difference between a discount broker and a full service broker.We have described the major differences here. Brokers cost extra money because just like you and me, they need to feed their family.
You have two options if you want to buy stock without a broker: The first is to use a discount brokerage service online. The second is to buy stocks directly from the company. Find a discount brokerage company that suits your needs. Check the cost of purchasing individual stocks directly and account minimums. Often there are hidden fees.
When you compare companies look for trading cost and then find the section that shows the fees. These two items eat away at your investment money. For the best experience, please update your browser with the latest version. Thank you for visiting Scottrade.com. We have implemented a Skip to Main Content link and improved the heading structure of our site to aid in navigation with a screen reader. We are consistently making improvements to the accessibility of our site.