Penny stocks are traded over-the-counter and you must use a broker to purchase penny stocks. The main thing you need to pay attention to is having enough money in your account to cover the cost of the stock and the broker’s commission.

But this does not answer the question: how to trade penny stocks?

The best way to trade penny stocks is to check out the pink sheet website. To trade a stock, you need to know the stock’s ticker symbol and the market on which the stock is traded. When it comes to penny stocks, you should always buy shares in multiples of 1000 or you may have to pay your broker extra money in terms of commission fees.

You should also tell your broker if your order is a market or limit order. A market order refers to the fact that you are willing to pay the best available price for a stock. In a limit order, you specify the price you are willing to pay for a penny share and your trade will be executed only if the price of the share reaches your price. You should try and trade limit orders as it will increase the control you have over the trade and also prevent price volatility.

Your broker should also know the duration of your order. For example, your order is valid only for the trading day or it may be valid until it expires on a day specified by you.

Now, if you want to sell a penny stock, you have to go through the reverse process of buying. You know how many shares you have and tell the broker that you want to sell as many shares of a stock in your account. You will need to give the broker the ticker symbol and the place where the shares are traded. In addition, you will have to specify the amount for which you want to sell the shares and until when your order is good.