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The first thing you do when you buy penny stocks is to research which ones you’d like to purchase. Unfortunately, information about penny stocks is scarce. The information that is actually available is suspect at best. In any case, once you find what you want to buy, you’ll need to enter your trade. There are two different ways to enter your trades to buy penny stocks. You can trade over the phone or over the computer.

In order to place a proper order, you have to know certain details about the stock you’re buying. One piece of information you’ll need to obtain to buy penny stocks is its ticker symbol. For the sake of giving an example, let’s assume the ticker symbol is XYZ. You might also need to know the name of the actual company. We’ll call it XYZ Corp for our example. Next, you will need to know the market in which XYZ’s stock is trading. For our example company, we’ll say that XYZ trades on the ABC Exchange. You will also need to determine how many shares you’d like to purchase. This is called the “volume” of shares. Let’s say that you have $2,000 to play with in the penny stock market, and you want to spend $750 on XYZ Corp’s stock. You find that the most recent price of the stock is $0.50 per share. Your volume is 1500 shares.

When you buy penny stocks, you must then decide if you want to put in a market or a limit price trade order. If selecting market, you will not know the price that you’ll pay for the shares. However, you’re guaranteed that the trade will be executed. If selecting limit price, you can set a maximum limit on how much you want to pay per share. For example, you can set the limit to $0.55 per share, so each share will cost equal to or below this amount. The risk here is that you might only end up with a fraction of the shares you originally intended to purchase. In some cases, you might end up buying no shares at all.

The next consideration is the duration of your order when you buy penny stocks. If you choose market, you won’t need a duration. Limit orders will need a duration. For example, you can limit your order to 3 days, meaning that you can purchase the 1500 shares of XYZ over three days. However, you’ll also pay 3 times the commission. To overcome this, you can limit your duration to one day when you buy penny stocks. That way, you only pay a one-time commission.

Last, you will need to know the total costs you’re going to have to pay, including commissions. Throw everything together, and you’re ready to make your first trade.

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