How to Pick a Penny Stock Broker
January 29th, 2010 at 2:30 pm Posted by
If you want to buy penny stocks you will need to use the services of a penny stock broker. This means it pays to know how to identify the best ones in the business. Instead of having to buy and sell them yourself, you simply instruct your broker to make the sales for you.
So where do you start?
Well, first of all you have to look into the background of each one. You want to pick a broker who has a good track record and plenty of experience. It wouldn’t be advisable to choose someone who is only just starting their career for example.
In addition to this you don’t want to be paying fees any higher than necessary. So look at the fee structure and make a note of those which are more competitive. Remember that to a certain extent you will get what you pay for though. You should ask yourself why the cheapest services are so cheap – it could be they don’t offer the same degree of assistance that another service offers.
Your penny stock broker also needs to be quite freely available. Supposing you want to buy a specific penny stock at a specific time and you cannot get hold of them? This could ruin your investment plans. So make sure you ask about availability and what you can expect from the service.
Be prepared to ask questions too. No matter what you want to ask a legit company should be more than happy to answer the questions. If you don’t get a response you know to go elsewhere. Scammers abound in the world of penny stocks, and you need to be able to pick your way through them to find the reputable ones. This might take time but it is time well spent in the end.
Your broker should also be someone you personally connect with. You might find someone who is really good at their job but if you just can’t click with them don’t use them.
Look for an online broker too as it will probably save you money. The internet is the place where hundreds of trades occur every single day, and there is a good reason for it. It is practical, easy and quick, and that is exactly the service you need from any good penny stock broker when it comes to buying and selling your shares.
Dean, nobody chooses their broker anymore, unless they like paying $400 to buy 100,000 shares of a 5¢ stock from your “guy” at Smith Barney. We all trade online, or over the phone to a call in center – so advice on choosing a personal human broker for penny stock trading is moot.
@packeteers while most people trade penny stocks online from the long side, in my experiences it’s a lot easier to find shares to borrow from a physical broker like Spartan Securities http://www.spartansecurities.com/ (i.e. short selling penny stocks Timothy Sykes style).
Another advantage to trading penny stocks with a physical broker is that you may have opportunities to get “blocks of stock”, or large quantities of stock at a discount to market. Physical brokers also have the ability to introduce you to Private Placements (if you’re a high net worth individual).
The Dean should have clarified these points in the blog post but physical brokers still do have some advantages over online brokers.
-The Dean