If you’re wondering how to buy penny stocks online, one good place is through discount brokers. As their name suggests, these brokers charge lower fees compared with regular brokers but will provide you with all the services you need for your trading activities. However, they will not provide you with the investment and trading advice that is provided with full-service brokers. This lack of investor advice could be a disadvantage for you if you are just starting out as a stock trader. On the other hand, if you already have some experience in stock trading, you can save a lot of money in fees by signing up with a discount broker.
How do you find the best discount broker and buy penny stocks online? Here are some questions that you need to ask to find the right discount broker for your trading needs.
1. How much do they charge per transaction? How much do they charge for their other services? Since cost is one of the main reasons for going with a discount broker, this is one of the most important questions you need answered before you decide which one to sign up for. For example, do they charge a fixed fee per transaction or are their charges on a percentage basis for every transaction? And what other fees do they charge, such as account maintenance fees? Also, watch out for hidden fees such as charges for special requests like stop loss orders, which can increase the amount of money you pay to the broker.
2. What are the minimum requirements you have to meet to qualify for their services? Many discount brokers actually make their low rates conditional on your meeting requirements such as having a certain amount of money in your trading account or making a certain number of trades per quarter. Familiarize yourself with these requirements and decide if you can meet them before signing up.
3. How do they deliver their customer service? Do you contact them through e-mail or is phone-based customer service available. Try to sign up with a discount broker that has the highest level of customer service. In particular, try to go with a broker who offers a 24/7 hotline where you can ask questions or get penny stock quotations.
4. Do they offer research reports on the trading volume and stock price of penny stocks? Some discount brokers may offer investors a newsletter of penny stock picks but this is not a standard service. Check the discount broker you’re interested in to see if they offer this service if it is important to you and if they offer it for free or if you have to pay an additional fee to avail of it.
5. What is their reputation? The online broker from learning how to buy stocks should have an impeccable reputation since you are entrusting them with your money. You can research the broker by checking out their BBB listing to see if they have any unresolved complaints or read reviews of their services posted by users. But make sure you use multiple sources when conducting your research to ensure that you get an honest picture of the company.