Start by doing your homework. The basic thing to understand is where the trading is done. Penny stocks are normally traded in an over the counter bulletin board (OTCBB) and also the pink sheets. You will not need to go through the strict federal requirements that are imposed on the New York Stock Exchange.
The second thing that you need to make sure you understand is the fact that trading in penny stocks is a very risky business. Most of the times, there are two types of businesses that list their shares as penny stocks. The first is businesses that are starting up and the second, those that are headed for bankruptcy. This means you have to be very careful to avoid losses. As long as you choose the stocks to invest in wisely, you can be assured of great profits.
Gathering the needed data is the next important step. This means that you have to know the stocks that you want to invest in, the ticker symbol of the stocks that you have in mind, the amount of money you are ready to spend on the stocks and how long you want to hold on to them. This will save you a lot of time and confusion when you get down to the actual trading
Contacting an online broker is the next step. Get recommendations of the most reliable brokers from people that have traded before. Make sure that you choose a skilled and reliable broker who will give you the right guidance through the whole process. Once you have chosen the right broker, they will send you a link to the online registration site. Complete the registration process and you will be ready to start the trading.
The next step is submitting the order that you have decided on to the broker. You will have to make sure there is enough money in your account before you can successfully submit an order. The rest of the process involves holding the penny stocks until they increase in value and reselling at your own convenience. The most important thing to do is make sure that you monitor your stocks very closely. Penny stocks are usually very risky to deal with. However, when you do your research well and closely monitor the stock, you will get great returns.