Penny stocks are disastrous for most, and you should avoid them. Better to own 5 shares of a solid $100 stock than 5000 shares of a shaky 10 cent stock.. The number of shares doesn't really matter, it's the same money.
Like many things, you can't fully learn until you are actually involved, and most of the time there is a "tuition" paid for that part of the learning process. Start by learning all you can about the market, including how to read financials, how to research people (executives of companies), how to read the economy and how to understand how the moods and emotions of the investors drive the prices. Lots to learn. When you do live, be cautious and skeptical while you are gaining experience.
A lot of money is lost by unskilled investors, without need. Don't be one of them.
Forget about "penny stocks" until you have extensive experience trading stocks. They are only for mugs or proven traders with profits to put in a very restricted market. Bear in mind over 2000 small companies represent just 7% of the UK stock market capitalisation, while the FTSE 350 accounts for the other 93%. Most of the spectacular rises that are quoted often get swallowed by the large spreads that novices overlook in their ignorance.
You don`t catch whales in puddles.
A viable investment in a stock trade would be 75 times the dealing cost e.g. 75*￡10 = ￡750.
Forget about ￡200 in penny stocks, its not enough and besides you have no clue about investing in stocks and you will simply lose it all in a few weeks. If you have dreams of becoming some hot shot stock investor with millions of pennies after a couple of months, forget it. Most newbies who invest in stocks end up losing all of their money within a few months.
Save it instead and put it into a Cash ISA account so you earn interest on it and it is safe.
200 is nowhere near enough to trade any shares
If you want to trade you need to do it with at least 5 different shares
(so thats 40/share from the 200)
It will cost you around 40 just to buy and sell them
So the share will have to double in value for you just to break even
On tiop of that true penny shares are bought/sold on a matched bargain basis
That means that if you want to buy say 1000 shares the broker has to look around for somebody who wants to sell 1000 shares
Simililarly if you want to sell 1000 the broker has to find sombody who wants to buy 1000
Consequently the spread between buying and selling prices can be something like 50% of the share price. (i.e at a given point in time it may cost you say 10 to buy, but you would only get 5 if you were selling instead of buying)
You may well see a price against a penny share but that was the price it last sold at, and that could have been months ago.
(you may also see shares quoted as a few pence. but if the company has issued billions of them then it could be very large and not a true penny share company. In this case its very likely it will consolidate its shares and issue its shareholders 1 new share to replace say 1000 old shares)
In reality true penny shares are for those who want to lose money unless they are extremely lucky.
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10K
I am currently in secondary school but have a keen interest in equities and was wondering how much capital i would need to start with? Would 200 be enough to trade penny stocks? is this wise? Thanks.
