In this lesson, I'm going to be teaching you guys how you can get started trading penny stocks.
We're going to talk about:
The first thing you have to know is that there are different markets upon which stocks trade on, which you might have seen on CNBC or Yahoo finance, like NASDAQ or the New York Stock Exchange.
There are certain regulations or procedures you have to follow in order to be listed on the different markets, but fortunately, it's very, very simple to understand.
There are also a few acronyms you’ll see often which refer to the different types of stocks themselves, for example, there's the OTCs, penny stocks, and pink sheets.
There are different levels of varying regulations that are required in order for companies to list on the various markets.
The rest of the stocks, which are way smaller, mostly trade as penny stocks, also known as the OTC markets and the pink sheets.
Technically the company can be doing or making up whatever they want in order to get listed on these exchanges, and it's much cheaper to get listed on these exchanges as well.
What can I do in order to start trading and buying and selling stocks?
The key thing to begin is having a broker.
Very similar to how in real estate you need to use a real estate agent to buy and sell your real estate, also in the stock market you’ll need a broker.
The only difference is that in the stock market it's actually legally required for you to have one.
This is because the SEC (Securities and Exchange Commission) put in place certain controls and policies to make sure that the average investor right doesn't get all their money taken from them due to schemes from the rich, wealthy Wall Street people.
Back in the day, these brokers used to be actual people that you would call into in order to make a trade.
Today, however, it's all done online.
Because of the internet, there are now electronic brokers such as E-trade, SureTrader, TD Ameritrade, Charles Schwab, Fidelity, and many more.
It's very important for you to understand that certain companies don't list certain stocks.
For example, Robinhood, they don't have any pink sheet stocks.
In fact, they even don't even have most of the OTC stocks.
This makes it harder for day traders to use something like Robinhood because they don't really carry the important pump and dump stocks and penny stocks that we like to trade.
They'll have all the blue-chip stocks which are on the New York stock exchange and are good for long-term holding, dividend income or swing trading.
So, when you're looking for your broker, make sure you just pay attention to which markets they include and which stocks from which segments and indexes are included to make sure that you’re able to trade the stocks that you want.
So that's a quick synopsis on how to get started trading, what markets that stocks are even on, and what you need as an individual trader in order to be able to buy and sell stocks.