Scoop Bucket

When you think of stocks, you probably imagine the billionaires you hear about on the news, or the movies like Trading Places. But chances are, you never think that there is a possibility of you personally trading stocks.

My mission today is to enlighten you so that you can realize wealth with a minimal $250 initial investment. There are millionaires out there, and even billionaires who started out trading with very little money to start with. There are brokerages out there that have small initial deposit requirements and I will provide you with that information.

You first need to sign up with a broker. Because this article is about penny stocks, let’s focus on a brokerage that allows you to trade them. Not all brokers allow trading of stocks under $1.00. The definition of a penny stock is a stock under $10.00, but the good penny stocks are literally pennies per share.

The reason why you want to begin trading with penny stocks is that you can minimize the risk associated with investing. If you purchase thousands of shares of a stock trading at 1 cent, what are the chances that the penny stock will increase in value to at least 2 cents? Now let’s say that you put $250 into that same stock, then sold it when it doubled in value. You just made another $250! Take the $500 in your account, minus the trading fees (usually around or under $10) and reinvest it in another penny stock.

Trading is not a simple task by any means. You must research companies before you can make a final decision on whether or not to buy their stock. Doing it any other way is just playing the mega millions lottery. Odds are that you will lose. But, there are companies out there who make it their daily job to research companies and analyze them for future gains or losses. You can do a simple Google search for “penny stock picks” and you will find a bunch of websites offering a free alert newsletter. They will provide you with the company stock symbol, as well as any helpful research that they performed. You can then take that information and do your own research on the company before you buy it. Just because a newsletter advises you that the stock will increase does not mean that it will. But if you research, you can make an educated decision. Company stocks tend to increase after a big press release such as when they are laying off employees to cut costs, or they just purchased land for gold mining.

I personally think that you should aim for the stocks at the cheapest levels. Keep it under 10 cents, and as close to a penny as possible. Occasionally you will find a stock that will rise in value from a penny to over a dollar. These types of trades usually mean huge gains for your brokerage account.

There are many brokers out there that do not allow penny stock trades. TD Ameritrade is one that allows them, and their fees per trade are under $10. They also allow for online instant activation of your account.

When investing in stocks, it is wise to keep a portion of your earnings in your brokerage account, while reinvesting a large portion. This will ensure that you are actually making money rather than risking it all on stock trades. If I were to have $1,500 in my account, I would keep $500 out of the way of risk. If the $1,000 doubled, I would then keep another $500 or so and reinvest the rest. When you end up trading in the 10′s of thousands, you can put away more earnings and decrease your risk gradually.

However you start the path down trading success, I recommend you do your research first. Learn the basics and begin to get your feet wet. You may end up being the next Warren Buffet!