Penny Stocks Invest Blog

Finding a broker is a very important step in making money through penny stocks. Finding a penny stock broker is not difficult if you do your homework and use some common sense in the process.

You first need to make sure the advice you receive addresses your investment needs. It should also be balanced.

Here are some warning signs that you should look for when finding a penny stock broker:

1. Do not fall prey to high-pressure sales techniques. A good company will not skyrocket in only a matter of weeks, so you should have plenty of time (days or even a week or two) in order to make a decision. Do not believe it if you are told otherwise. If it is a great deal today, it will still be a great deal tomorrow.

2. Do not invest in any type of security without knowing exactly what you will be spending your money on and how it will be spent. Make sure you know how much will be spent on the offering, the management and the promoters.

3. Check all of the documents involved. Watch for irregularities, such as a trade confirmation that is marked “unsolicited” when you broker did actually solicit the trade. Such things are sometimes done in order to avoid registration laws. It might be an honest mistake, but be wary.

4. Make sure that there are no purchases on your account that you did not authorize. It might be an honest mistake, but it could also be a sign that a broker is “parking” securities in your account temporarily. If this occurs, complain both verbally and in writing immediately to your broker, his manager and the Securities Division in your state.

5. Finally, investigate before you invest. Read about the companies. Check out your broker. There should be a Securities Division in your state that will have records of complaints. Check them out thoroughly.

Finding a penny stock broker is an important part of the process, but remember that if you are ever in doubt about a penny stock broker, err on the side of caution and go with your instincts. It is always better to have been too cautious than to have lost your life savings.