Let me point out that penny stocks are a bad investment. Penny stocks describe those companies whose stock cannot be traded on an organized exchange like the New York Stock Exchange because the company does not fulfill one or more of the requirements of the NYSE. Penny stocks are typically traded over-the-counter (OTC), also known as the Pink Sheets. Investing in penny stocks is highly speculative. As an investor myself, I would not recommend penny stocks for anyone. Instead, I would recommend safer investments like mutual funds and index funds.
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Penny stocks are a terrible investment. Put your money in the bank or buy index-based mutual funds.
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In the DJIA, the prices of the 30 component stocks are added and then divided by something called the Dow divisor, which is constantly adjusted. The divisor is in place to buffer for the effects of price changes from events like splits or dividends. The divisor is currently 0.132319125.

If you need more info, these articles explain it in detail:
http://www.djaverages.com/?view=industrial&page=calculation
http://www.investopedia.com/articles/02/082702.asp
http://www.investopedia.com/articles/exchangetradedfunds/08/index-debate.asp

Hope that helps!
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I would steer away from hyper-popular stocks like Apple or Google as they are pure sentiment plays and don’t really trade on their P/E. Stick to real companies that produce tangible products that we consume on a daily basis like oil and retail – you are less likely to have nasty surprises there.
References :
http://www.contracts-for-difference.com/

Before you start, learn some stock market basics, like selecting the right stock to trade, timing your entry and exits from trades, and risk management.
References :
http://www.penny-stock-advisor.com/stock-market-for-beginners.html

Start making money with Stock Market

Making your first stock trade can be quite intimidating. There is new language and symbols that you don’t always understand. You can reduce your stress by following a few easy steps.

Step1. Learn the language of the trade. Find out about the types of orders you can place. A market order is one that you buy at whatever price the stock is at the moment you place the order. This type of purchase is not for the first time investor. Instead, use a buy/limit order. The buy/limit order limits the maximum price that you pay for the stock. If the stock is available for a lower price you get that price. The same concept is true for sell/limits, but it is the lowest price you want to sell your stock.

Step 2. Decide if you are long-term or short-term buying. In order to make money in the stock market you need to identify the plan you want to follow. A short-term buyer looks for the easy, but frequently small, movements of the stock and buys or sells accordingly. Long term buyers seek out stocks that they believe substantially appreciate over a period. Microsoft millionaires got the penny stock as a bonus, because it was worth so little many just held on to it and later were delighted they did.

Step 3. Choose an area you know something about. A stock club of women made fortunes by stopping at restaurant chains, visiting stores and consuming the products of the companies they bought. One of the best mutual fund managers in specialty stock used this practice to become the top manager in the nation. When you choose a stock for a long-term investment, know the business.

Step 4. Watch the price fluctuation. Each stock has a different rhythm. The short-term buyer watches that rhythm and works with it. If you find a stock that you like and notice it has an up and down, almost predictable price, use the information to make additional money. Put a buy/limit order in at the low end of the cycle.

You may miss an opportunity by pennies, but if it is truly a repeating cycle the opportunity comes back again. Wait until you purchase the stock and immediately place a sell/limit order for the higher end of the cycle. Make sure the spread between the two is enough to cover the cost of both trades and make a profit. If the cycle is continuous, do this repeatedly.

Step 5. Concentrate on one or two stocks. When you begin to trade, it’s easy to jump all over and buy a little of several stocks. That is diversification, but costs you more in trades in the end than you make on profit. Focus on one or two stocks to begin your trading.

Step 6. Buy stocks with higher volume. Some of the penny stocks are tempting but when you notice the volume, it is quite small. This means that when you want to sell, there aren’t many people buying. Unloading the stock becomes difficult.

Step 7. See who manages the company. Some CEO’s have wonderful track records. If you notice that the CEO managed three previous companies and they all went belly up, he may not be bad, he may be the man they call in to close a company down. Check the management carefully.

Step 8. Track your trades. List the dates, share price and number of shares on one side and if you sell list the date and price on the other. Track the profit to see what percentage you take. You need these records for the IRS. Aim for a 10% to 15% profit on your money. In a down market, 8% is still good.

Arkaitz Arteaga MarketStock.net
References :
http://www.marketstock.net