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If you are looking are thinking that Penny Stocks are a Get Rich Quick Scheme, Im sorry to disappoint you. Although great fortunes can be made from penny stocks, people can also lose everything they invest in Penny Stocks. The most important investment you can make at the start of your investment career is to invest in education.

Why Education and not stock?

Diving head first into the stock market is a great way of losing your money which is why we dont recommend it. The best thing to do is to read, read and read some more before investing. One of the best places to get free information on penny stocks and trading methods is from the internet.

Forums, websites, news sites and eBooks are a great way to improve your penny stock investment education. There are some great books that you can borrow from libraries or purchase cheaply from shops.

When reading on the internet, please be cautious of stock recommendations and strategies and methods. Stock recommendations and opinions from internet forums can be biased and cannot be fully trusted without doing your own research. Similarly, eBooks with strategies which promise great returns usually do not work as suggested. The reason for this is, even if the strategy worked well for the author, there is no guarantee that it will work for everyone else because everyone is different although you may learn something that you did not already know.

Google News has a business section which is group for free up-to-date information on stocks. Yahoo Finance also has good news section and also provides free charts and company information.

No matter who you get advice from, whether its from a financial consultant or friend, you should always carry out your own additional research. You should make decisions based on facts rather than opinions.

When you feel confident enough you can try some test trades. You can either keep a record of your trades on paper or you can use a stocks simulator website where you invest with fake money. There is a website called Champion Investor (ChampInvest.com) which is great for this purpose as it also calculates profits and losses automatically. Also, if you the top performer of the month, you will be rewarded with 1000.

Using a stock simulator means that you will not lose your hard-earned cash if you make a bad investment. Instead, you will learn not to do it again without losing your money.

If you are consistently able to make a profit with your test trades then you can move onto the real thing. Keep your investment strategy exactly as it was when you were making profitable test trades, but instead of using fake money, you will be using your own money through a stock broker.

So, to summarise – if you are looking to get started in penny stocks, please do not dive in head first without investing your education first.

If you want be a successful penny stock trader, youll need to be an intelligent trader. There are very few requirements to start trading in penny stocks. It can be broken down into three main things.

1.Money:

The money we are talking about is not just the money that is sitting in your bank account. It is not the money that you use to pay for your rent, your car or your food. Penny stocks can be extremely unpredictable and although you might make a great deal of money it is also true that may lose everything, so it is important especially when you are starting out with penny stocks that you only use money that you can afford to lose. After you have built up a nice profit, you can re-invest your profits from past trades which will snowball your earnings.

2.Knowledge:

This is without a doubt the single most important factor in determining whether your budding career as a penny stocks investor will be a spectacular triumph or a dismal failure. If you are a newcomer to investing of any kind there are various guides you can buy and it is a good idea to read several of these before spending any money.

Penny Stocks: The Next American Gold Rush by Dan Holtzclaw
Stock Investing for Dummies by Paul Mladjenovic
The Guide for Penny Stock Investing by Donny Lowy

These are all good and although they will not help you with specific decisions such as whether to buy a particular penny stock, or when to sell, they give you a good background on how it all works and are invaluable in building a good knowledge base.

3.Make A Plan:

Before you investing any money, make an investment plan and stick to it at all times. This will help you become disciplined and will also help you organise your time and investments. Keeping things simple will result in less stress. Your plan should consist of the investments you are going to make and why and how much you are investing in them. It should also include your exit point (the price which you will sell your investment at to take profit) and also the time you want to allocate for your investments each day (i.e. The time it takes to monitor and research them).

Now you have got all the major elements in place you are set for the roller coaster ride that is the world of investing in penny stocks But remember that knowledge is the most powerful tool you have to make your penny stocks successful so start learning today.