One of the big reasons why a person might want to buy penny stocks is pretty simple: the shares will only cost you pennies. It is probably believed that a stock will soar from $0.05 to $0.10 much easier than another stock might increase from $50 to $100. They would probably be right in assuming this, most of the time, and it doesn’t take a Leonardo Fibonacci to realize that both of the scenarios would double a person’s money.

Where to Buy Penny Stocks

You can buy penny stocks in just the same way you would buy any other stock. You can open up an online trading account at your current broker of choice, and effectively buy penny stock online within just a matter of minutes after logging in. It will differ with brokers, as some might charge you simply a per trade fee while others will charge a commission based on money made. These are the kinds of questions that must be addressed to your online broker before you get involved in online penny stock trading.

How to Buy Penny Stocks

That is another great question, but not as easily answered. Systems and strategies that deal with how to buy penny stocks abound, and you would do well to investigate and find a good book that deals specifically with penny stocks and all their intricacies. There are entire websites and online forums and manuals dedicated to learning how to master the art of penny stocks. You can even find people who, for a fee, will send you their hot penny stock picks, before they happen. I shouldn’t have to tell you, of course, to be wise with those kinds of things. As good as many traders are, no one can truly predict the future, so follow the old trading mantra even when you buy penny stocks and never risk more than you can afford.

There of course are different ways to go about stock buying, depending on a number of factors. Not the least of which might be your age. The mantra I have always heard and lived by is to invest in more ‘risky’ investments using your age as the percentage that represents the more ‘conservative’ part of your portfolio. So if you are 40 years old, this idea would state that you should have 40% of your portfolio in more conservative investments, and 60% in riskier investments. I’ll leave determining what is conservative and what is risky up to you and your financial planner, but suffice it to say, it might be a good thing to think about when determining what stocks to buy, and how to buy stock in general.

Buying stocks can be done many ways, but quickly increasing in popularity is the idea that you can buy stocks online. This is done through an online broker where you set up a trading account, fund it with your desired amount of money, and can instantly begin buying and selling stocks at will. I wouldn’t use the ease with which you can buy stock trick you into buying every new IPO or to make you buy penny stocks on a whim. Even though it is cheap to buy stock online remember that your money is at risk with every trade that you place, so it must be done prudently. Buying stocks for the long term, from good reputable company is a far better option than looking to buy stocks off of some ‘good stocks to buy’ list of the day.

Stock buying in my opinion is still one of the last ways that the little guy can get ahead. Through prudent market research, watching companies and stock prices as they rise and fall, you can essentially buy-in and own a portion of some of the greatest companies this world has to offer. That is not something that should be taken lightly, but definitely something that every person who has considered the idea of buying stocks should do.

Still, there are few better ways to prepare for retirement and make good money, than buying stocks. To be honest, I think the problem boils down to how people go about buying stock, more so than the simple fact that they buy stock at all. I’ve made mention before that the stock market falling is not bad for everyone. Again, if I’m not just about to retire within the next few years, I don’t want to try and buy stocks when they are at their peak. Knowing that over the time the market his always risen, I would much rather be involved in stock buying when the market is low, getting more bang for my buck and then holding on for the long term.

That being said, I won’t profess to tell you what stocks to buy or even really how to buy stocks at all. I’m no professional. I suppose I can tell you however, how I play a situation like this and what I intend to be doing for the foreseeable future.

It is my personal opinion that when buying stocks the best stocks to buy are those that pay a good, solid dividend (with the idea of reinvesting these dividends), and that these dividend-paying stocks be of reputable companies that have stood the test of time. I’m interested in how some people try to buy penny stocks at six cents per share, hoping it goes screaming up to nine, that’s just not my style. That quick ‘buy stock online’ idea to sell it a few minutes later can be dangerous, and isn’t the sound, long-term investment approach that I’m going for.

Instead, I am looking to add shares of stock of the above-mentioned type of companies, and to continue to buy on dips, such as the severe one most companies saw around the end of 2008. These shares will average out and continue to add up, all the while paying out their fantastic quarterly dividends that will be invested back in for further compounding awesomeness. I truly believe that over the long-haul, that is how to buy stock. There is no need to work your tail off at the stock market, let the market work for you over time when buying stocks.

What You Need to Know Before You Buy Stock

There are some important aspects of this game, if it can be called a game. Going into stock buying blindly will surely lead to trouble. How will you learn which stocks you want to buy, and when you do figure that out, where will you go to buy them? Will you want to buy stocks quickly and try and turn them around quickly for a profit, or will you want to hold them for a short while, or a long while? Along with the seemingly endless possible rewards, you also need to know the risks involved in investing. To simplify it, you will want to know a couple of key points as you begin. A short breakdown follows:

1.    Knowing the reason you want to buy stock.
2.    Where you can go to do your stock trading.
3.    Similar markets you can get involved in.
4.    Where you can get advice on how to trade the stock market.

Get Educated Before You Buy Stock

Above all else, make sure that you know what you are doing. Undoubtedly you will make some bad moves, whether it be a bad short term trade, or holding a stock for a long time only to see it turn around on you, taking your profits with you. It is important to remember that since inception, the stock market has always gone up over time. If you are careful and methodical you can take advantage of some of the easiest money you will probably ever earn.

I have tried to provide a resource for you here to be able to get a grasp on what you can do as you begin your path to becoming a trader. The internet of course contains a plethora of fantastic information that you will be able to use as you get your trading career started.  Don’t get overwhelmed, but focus on those resources that will help you to move forward, and cause what some call ‘paralysis by analysis’.  Learn before you begin, but a lifetime of learning without implementing will not get you anywhere. My suggestion as you begin would be to take a look around and get a feel for the route that best suits your needs, and then begin to dig deeper before you buy stock for the first time.

You might work for a large, publicly traded company where you can buy stock in that company.  They might even give you stock as a bonus, or as a part of your pay.  This is probably the case if you work at a place like Wal-Mart, Nike, or many others.  This of course won’t include most people, as 80% of people are employed by small businesses. In addition to this, however, there are many companies that will sell you stock in their companies directly. General Electric (GE), Home Depot (HD) and many others will let you take part in these direct stock purchase programs.

The Traditional Route: A Stock Broker

You know, the old guy that has an office down on Main Street.  Stock Brokers buy stock on behalf of clients, often times giving advice along the way. I know, I’ve heard the joke as well: Why is the guy who gives you financial advice called a stock ‘broker’. Good question.

Online Stock Brokers

Take the idea of the stock broker, but give him a webpage and now you have an online stock broker.  Something like that, at least. When you open an account with an online brokerage in this way, you are given what is called a trading platform. Basically this is a computer software where you are able to login, see charts and graphs of all the different stocks you could imagine, and place trades, deciding on the spot what you want to buy and what you want to sell.  Buy stock from the comfort of your own home? I know. A novel idea.  I worked for a period of time for an online broker. In a sense it was like a regular broker, only that we didn’t give trading advice of any kind, we basically helped people to set up trading accounts so they could get going on their own.  It is a very simple thing to do. The hard part? Know which stocks to buy!

It is important to note that there are two schools of thought when it comes to how you should trade. Fundamental traders take a good hard look at the ‘fundamentals’ of business, as well as things like interest rates and the general investment climate at the time. A fundamentalist might take a look at the quarterly earnings of a company before deciding to buy some shares of said company.

A technical trader on the other hand looks strictly at charts, also known as graphs.  You have probably seen the charts before; with their lines or bars or ‘candlesticks’ spanning from left to right across the page, indicating the price patterns or movement of a given security over a given time period.

Trade Signals

Still, there is another way. Just as I might not attempt to fix my own car, or perform my own surgery, if I did not consider myself a pro, or at least very good at stock trading, I might want to rely a bit more on someone who knows more than I do; someone who might have more insight into which direction the market might be heading. I have seen and tested many of these companies over the past years, and in all honest can only give credence to one that has stood the test of time for me personally.

Doubling Stocks

Doubling Stocks is, of the many stock programs I have tried, the best one on the market today. I just can’t come to talking about the money that I earn, but I can tell you that the accuracy of this extremely reasonably priced program has far, far outweighed the cost. You can learn trading on your own, there is no doubt about this. But if you are looking to buy stock with the big boys, and make a good living from it, there is no better program than Doubling Stocks. With their 60 day money-back guarantee, and the fact that you can paper trade (not take the trades with real money) you have truly got nothing to lose, but a whole lot to gain.  It comes with my stamp of approval.

This is often called the Foreign Exchange or ‘Forex’ Market.  The currency market has been gaining rapidly in popularity over the past few years, and is a fantastic alternative for those who don’t wish to buy stock. It provides a 24 hour market, as well as more volatility (which can lower the amounts of slippage and gapping that you see) as well as less currency pairs to trade than there are stocks, as sometimes I feel that ‘less is more’. Forex can be a great way to make great money over time, but take care as in recent times it has fallen prey to many scams and fly-by-night websites, more akin to the Ponzi schemes that have plagued the investment world than good, legitimate invest opportunities.

Commodities

These have been around for a long time, but are still a favorite of many.  Beans, wheat, you name it. Traded often by way of futures or options (a whole different ball-game) these can be a great way to earn money from the markets, once again like the others, if you know what you are doing. Gold and silver are also common things to trade. Gold, being inversely related to the U.S. dollar, has had quite a run over the past few  years, and has always been knows as a ‘safer’ alternative for those who don’t want to sell and buy stock or other investments. You can even buy gold bars that you keep physically, if you want.

Mutual Funds

Worth mentioning, some buy stock, and some buy groups of stocks.  It is thought by some that buying an individual stock is more risky than buying a blanket of stocks that might be hedged in certain ways.  While some stocks in the mutual fund might lose value, others might make up for it and then some by gaining value. There are many different combinations of stocks that are bought and sold through mutual funds, and it all comes down to knowing your risk aversity, as well as studying the groups of stocks that you are going to find in any mutual fund.

Position Trader

Some do it for the long-term benefits, hoping to be able to retire well and live a comfortable life.  This approach is not bad at all.  Even though the stock market has seen its fair share of crashes; the crash in the 1920’s, again in the 1980’s and most recently towards the end of 2008, stocks have always been a great investment, making fantastic overall gains over this period of time. These people, who buy stock for months, and even years or decades, are known as position trader, or long term investors.

Swing Trader

The swing trader is much shorter term, although at times not by much. A swing trader can buy and hold a stock for a week, a few weeks or even around the month mark. This is a good, and common way to trade for those who are in it for the thrill, but don’t want to buy and sell anymore than that.

Day Trader

Lastly there are day traders. These traders are in it for the thrill, but at the same time will take it very serious, just like any business, because for some their entire livelihood rests on their ability to be able to take more out of the market than gets taken from them. Day traders have to be quick when they buy stock, and will often leave positions open for an entire day, but can close them as quick as within a few seconds of having opened them, depending on the volatility of the market.