[mage lang="" source="flickr"]top penny stocks[/mage]
stocks trading question?
i have been asked to trade 3 stocks for my business class and to write reports on each. i have a question though…the stocks are penny stocks and under $5.00 each but there is a $7-10 fee for trading on top of the $5 stock….does this mean that everytime i sell and get another stock, it will cost me another $7-10? these are penny stocks and this is for my class project…do i really need to spend upwards of $50 or is there a much cheaper way to go about this?
Yes, every time you buy and every time you sell you have to pay for the trade, $7-$10.
There are two cheaper ways to do this.
1. Open an account with a brokerage (like Merrill Lynch) and meet their minimum balance requirements (I think it is around $250,000 right now), and they’ll give you a certain number of free trades per month. You can call them and ask about their minimums. Then, since you are doing this on paper and hypothetically anyway, just tell your teacher that you have a hypothetical account with a minimum balance that lets you do, for example, 30 free trades per month. If you can justify this by getting the terms in writing from Merrill Lynch (or whoever you pick that has this plan) then maybe your teacher would accept it.
Or, 2. Look into DRIPS (Dividend Reinvestment Plans), although I don’t think there are any DRIPs stocks selling under $5.00 per share now. Search on DRIPs on the Internet.
Suggestion – while it may sound great to buy a stock selling at $.0001 per share (so you can get millions of shares for cheap), they rarely pay off and you end up losing money. I’d stick with shares of companies that are low for a reason – such as Citigroup, which sells for around $4.00 per share. That company is viable and it is trying to pull itself out of the whole banking mess by selling off parts that aren’t viable (like their student loan business). It is also easy to make a justification for buying it, in a report. It is still technically considered a low priced/penny stock because it costs under $5.00 and institutional investors aren’t usually permitted to buy a stock until it is over $5.00 per share.