Choosing Where to Buy Penny Stocks Depends on Your Trading Experience

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There are essentially three different options when choosing where to buy penny stocks: A discount brokerage firm, a full service brokerage firm, and a money manager or investment advisor.

Discount Brokerage
A lot of people just go with a discount brokerage firm because it’s cheaper.  I believe this is fine for seasoned investors but not if your new to stock trading, especially penny stock trading, due to its highly volatile nature.  There are many good discount brokerage firms and pretty much all of them are accessible online.  A discount brokerage account will allow you to buy and sell stocks online at the click of a button.  They normally will charge you a set commission per transaction though many will lower the commission if you are a high volume trader.  Some good discount brokerage companies include Interactive Brokers , TD Ameritrade, E*Trade, and Charles Schwab.  Just make sure you compare the services offered and their fee schedules as depending on the type and quantity of trades you perform, one firm may be more cost effective than another.

Full Service Brokerage
Despite the growing popularity of discount brokerages, there are still a good number of investors who prefer full service brokerages when deciding where to buy penny stocks.  Full service brokerages though typically more expensive, offer a much greater level of service for investors including general investment advice, executing trades on your behalf, and even recommendations on which stocks to buy and when to sell them.  For investors with limited knowledge, particularly those who wish to buy penny stocks, a full service brokerage could be a good choice.  Just be sure you go with a reputable company you find a stock broker you can trust and that has experience buying penny stocks.  Some of the better full service brokerage houses include JPMorgan, AG Edwards, Merrill Lynch, Morgan Stanley, and UBS Financial Services.

Money Manager / Investment Advisor

Finally, for those who not want to even think about which trades to perform and when, you can find a Money Manager also known as an Investment Advisor.  Though most people think of money managers as those who manage mutual funds, money managers can actually manage any type of investment. A money manager is someone who will manage your account, make trades based on their expertise, and keep you up-to-date on the progress of your account.  Though some money manager are tied to brokerage houses there are still many who are completely independent.  Now since our focus is with penny stocks, you will want to find one who has a proven track record trading them.  Finally if you choose to have a money manager, it’s very important to find one you can trust and that has a strong reputation in the financial industry.

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