In my own humble opinion, I wouldn’t bother with penny stocks in general. I’m much more interested in the long term life of stocks rather than buying a cheap option and hoping to make a quick buck from it. I know a lot of you out there are interested in finding a great penny stock broker so I’ve compiled a quick list of things you should look out for before you start sending your money off to anyone. It’s something all goof stocks for beginners site should cover.

Penny Stock Brokers

Why would you want to buy penny stocks in the first place? Well people tend to be attracted to them firstly because of the reduced initial outlay of money. It’s easier to raise the cash for a few penny stocks than it is to start buying those Google stocks right? It’s not really so much about the value as it is about being able to afford some stocks. Penny stocks are also attractive because if you’ve hardly spent any money on them in the first place you’re unlikely to loose a lot of your cash. There also notorious for being volatile which means if you buy them at the correct time and then sell them on you might just make a little money.

I shy away from buying them for a lot of the same reasons. They are too volatile for me and as I’ve mentioned before I hate to think that I’m gambling with my money. They companies that you buying a stake in tend to be less secure also, that’s one reason why the price is so low. I like my stock purchases to be as safe as possible even if it is costing me a couple of bucks. These companies tend not to pay dividends to its investors which is one of the main things I look for in an investment. Finally, the companies selling stocks so cheap tend not to be subject to the same strict reporting requirements as companies with more value. So you never get to see the whole picture of just how well they are doing in their particular market. If all this sits ok with you then by all means go for it. I’m sure you could argue that you don’t need to know half of this stuff if you’re going to sell the stocks on as quick as you can right? That’s just my way of thinking.

Anyway, now that the basics of penny stocks are out of the way lets get on to how to find a good penny stocks broker. Timing is one of the key factors of buying penny stocks so you need a broker who can get the job done for you. There’s two options available for you with brokers. You can either go for a discount broker who will charge you minimum commision on your trades. You can also go for a full service broker who would traditionally deal with larger scale stock prices so it is worthwhile asking the question before you sign up. So what’s the difference? It really comes down to reputation and who you fell comfortable with. There’s less chance something funny is going to happen to your money is you stick with one of the big brand brokers but if you do you’ll have to pay a fortune on broker fees.

Commission rate is the key here. You’re going to be buying lots of stocks at different times so getting constantly charged a fee is going to eat into your funds. Remember, you don’t get this back it goes straight into the brokers pocket. Aim for 10% commission on the trades.

Speed is also one of the key factors here. The speed of order execution has to be excellent to get the penny stock at the price you want. Communication is important so make sure it is a broker with easy to use website and of course a phone number where someone actually picks up the call!

Customer service is something that should be high priority as you never know when you’ll need a bit of help with a transaction or even technical help on how to use the website.

Reliability is another important point here. You want to make sure the company you sign up for won’t do anything silly with your money. They should also have minimal disruption on their website. You want a company who you can contact when you need to. It should always be about stock market for dummies!

The easiest way I’ve found to get a decent penny stock broker is by looking at online testimonials and through asking questions on the Motley Fool website. If you have friends or family who have some experience then ask them about it. Sometimes a personal recommendation can be the best option. If you get a trusted friend telling you how amazing a broker is then why not go for them? It’s really just another one of those trading options right?