How to Invest in Penny Stocks Online without a Broker?

How to Invest in Penny Stocks

Have you been wondering on how to invest in penny stocks without a broker? You are not alone – a lot of investors feel like hefty transaction fees eat up the significant portion of their earnings. Indeed, most penny stock brokerage firms enforce large account minimum balances, annual or monthly fees on top of transaction fees that can ring up to $19.99 per transaction whether you are buying or selling penny stocks. If you are looking for ways on how to invest in penny stocks avoiding exorbitant brokerage fees, keep reading below.

Direct investment is one way on how to invest in penny stocks without online brokers. Some companies have investors relations department that you can contact directly and buy stocks from them. Some large companies like Coca-Cola, Walt Disney and Procter & Gamble can directly sell you the stock bypassing the brokers. In case you are thinking of investing in a dividend stock, they may offer you a dividend reinvestment plan that will allow you to further enrich your portfolio. The only drawback when it comes to investing in penny stocks without a broker that not all the little companies have direct investment options which ultimately may limit your stock selections. By all means check out the website offering you hundreds of stock options.

Another way you can do penny stock investment without a broker is through OTC Markets and Pink Sheets, but beware this is one of the riskiest ways out there. Pink Sheet and OTC Companies do not list their stocks with major stock exchanges like NYSE or NASDAQ because these are usually companies facing bankruptcies or otherwise difficult financial times and therefore cannot meet their strict listing criteria. We do not recommend you buy penny stocks through these markets or through any penny stock lists suggested by them because too many scams and financial losses stem from these kinds of stocks.

If you are deciding on how to invest in penny stocks and cut brokerage fees, one way is to find a discounted broker with minimal fees and very often zero account minimums so you can start trading for virtually very little money. Having a discounted broker means that you will have access to purchase all sorts of hot penny stocks, not just stocks from companies that have direct investment potential. Pick super cost efficient online discount brokers like E-Trade offering $9.99 fee for limited trades and $6.95 if you make over 150 trades per quarter. TD Ameritrade is another cost savvy online broker that will cost you $9.99 per trade and allow you to trade from the comfort of your own home.

The first step in figuring out how to invest in penny stocks is to open an online trading account. If you are dealing with an E*Trade service, for example, you will need to open a New Order Ticket and select a Stock Tab. Please be advised that penny stocks are rather thinly traded and there may not be enough sellers of a particular stock at a given time, therefore you will have to place a limit order instead of a market order by entering a ticker symbol, quantity and specify your buy price. The buy price would typically be the latest quoted price of a penny stock. Verify your information before clicking the processing button to make sure all the amounts and pricing are correct. Most online discount brokers can also fulfill your order online if you do not have immediate access to the Internet.

Just a final word of caution for those who are trying to learn how to invest in penny stocks is to never trust any penny stocks newsletters or alerts you might be getting through the phone or e-mails. The penny stocks risks are just too high to not do the research yourself!