Being able to buy and sell penny stocks at precisely the right time can be extremely difficult to master. Knowing how to find penny stocks that are worth buying and selling can be an even more difficult task to master, especially if you have no idea where to look or what to look for.
Unlike traditional large cap stocks and other securities that are easily and quickly accessible, penny stocks aren’t listed on any of the major exchanges making them a challenge to find at times. When searching for penny stocks, there are a few things you need to keep in mind and consider: Price, Charts and news. Keeping a close eye on these 3 things can make finding penny stocks a whole lot easier and a lot less difficult.
First of all; before you can even consider analyzing any small cap company, you need to first be able to find these companies and their tickers. If you’re not quite sure where to find penny stock company/stock listings, check out TheHotPennyStocks.com, their pink sheets list is a great starting point when it comes to finding potential penny stocks. Their list categorizes pink sheets (penny stocks) based on their daily gains, daily losses and daily trading volume; using these three factors along with previous three factors can make finding penny stocks much easier.
Analyzing Price Points
Some might argue that a penny stock’s price doesn’t really matter and then there’s other people who believe that a stock’s price can play a major role in its profitability potential. A penny stock’s price can tell you a lot about it’s potential; whether it has the ability to run or is likely to sink.
Usually it’s common for many traders out there to find pink sheets whose price range falls well below $2; while this does work and actually presents the potential for bigger gains, it also poses the risk of crashing and burning. For me, price point is important and I look for stocks who stand strong around the $3-$4 price range. This price range usually consists of small cap companies that have shown past potential and continue to show potential; these are the companies that are likely to reach well beyond a $5 price range.
Though the price might not be as crucial as the following two factors, it is still something you need to consider when trying to find penny stocks to buy.
Reading Charts
Cup and handle chart indicating a possible run.
When it comes to finding penny stocks, charts are one of the most important tools a trader can have in his or her arsenal. Charts will give you a great idea of how the stock has performed in the past and how it might perform in the future.
The great thing about penny stocks is that their charts give an overall idea as to whether or not it’s worth buying, unlike traditional large cap stocks that require time intensive valuations and research.
When finding penny stocks based on charts, you need to be looking for patterns. Patterns will, for the most part, give you an idea of when to buy before the stock is about to run. Being able to spot patterns and trends will give you a major advantage when it comes to finding penny stocks.
Trading on News
When it comes to penny stocks, paying attention to the news is crucial. Believe it or not, news can play a major role in how penny stocks are moving throughout the day. If a company you’re watching announces great news sometime during the day, chances are their stocks going to breakout.
One of the most important things when it comes to trading penny stocks on news is a news filter. Using a news filter will give you a huge advantage. News filters allow you to set up alerts according to your penny stock list. Whenever a company you’re watching issues a press release or is noticed in the news, your news filter will pick it up and notify you immediately.