When you are ready to buy, the type of order you use is critical. Always use limit orders instead of market orders.
A limit order ensures you only buy or sell at your specified price.
Be skeptical of "hot tips" from social media or email newsletters, as these are often part of pump-and-dump schemes. Step 3: Master Technical Analysis
Use volume indicators to see if a price move is backed by real buying interest.
Penny stocks usually trade on the Over-the-Counter (OTC) markets or the Pink Sheets rather than major exchanges like the NYSE or Nasdaq. These companies often have smaller market caps, lower liquidity, and less stringent reporting requirements. Because they don't trade frequently, small buy or sell orders can cause massive price swings. Step 1: Set Up a Brokerage Account
Look for "commission-free" brokers, but check for hidden "surcharge" fees on OTC trades.
Limit any single penny stock position to 2% to 5% of your total portfolio.
Keep a trading journal to track what worked and what didn't.
