How to Invest in Stocks With $10

By Contributing Writer

  • Overview

    New investors are getting into stock trading all the time. It is a potentially profitable way to make money from home. But buying stocks takes money and many people don't have the few thousand dollars needed to start investing in stocks. Fortunately for small investors there are penny stocks. These are low-priced stocks worth a few pennies to a few dollars per share. Penny stocks are usually issued by very small or start-up companies, but some low-priced stocks come from well-known companies whose shares have tumbled in price. By doing research a person can invest in stocks with only a few bucks.
    • Step 1

      Educate yourself about penny stocks. The best way to find companies to invest in is to learn as much as you can about the stock market and about buying and selling shares. Read magazines like "Penny Stock Magazine," "Penny Stock Preview" and "Low Priced Stock Digest." You can find general information about the stock market by reading "Smart Money" and "Forbes" magazines and visiting the website for Bloomberg University.
    • Step 2

      Practice buying and selling stocks. One of the best ways to learn how to buy penny stocks in to trade on paper. Another option is to take part in online trading games. Once you have a basic understanding of stock investing, trading on paper will give you the confidence to invest for real. With stock trading games you get virtual money that you then use to buy and sell stocks. The system keeps track of your profits and losses. Stock Stimulator by Investopedia is one online trading game.


    • Step 3

      Find a discount stockbroker. To buy stocks you need a broker to execute the trades. Discount stockbrokers have reduced commissions that are important when you only have $10 to invest. Many discount brokers do not handle penny stocks because the commissions are too low to make the transactions profitable for the broker. Also most discount brokers require an initial deposit of $500 to $2500 to open an account. Two discount brokers with no minimum deposits are TradeKing and Zecco.
    • Step 4

      Choose stocks with good value. Many of the publications about penny stocks provide recommendations on which stocks to buy. While these are a good starting point, you need to make your own trading decisions. Try to invest in stocks that are in industries you are knowledgeable about. Look for stocks with low debt and good earnings. While many penny stocks have a short earnings history, try to locate stocks whose prices have steadily climbed. Buying stocks of large companies whose stock prices have fallen may be a great bargain, especially if the company still has good growth potential.
    • Step 5

      Decide how you want to trade. Some investors buy and sell stocks for the short-term. Some people are day traders. Other investors prefer to buy a stock for the long-term in the hopes that its price steadily rises over the years. Before you start buying stocks, choose an exit strategy. Many penny stocks rise rapidly in price, only to fall in price. Substantial profits can be made if you decide beforehand when to sell all of your shares or part of your shares.
    • Skill: Easy

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