Wondering how to sell penny stocks? Penny stocks are a great choice for traders who want to start investing with just $100. The popularity of penny stock trading has skyrocketed because penny stocks are “designed” for investors with small starting capital. In this step-by-step guide, you will learn how to trade penny stocks for beginners.
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Jordan Belfort, also known as the “Wolf of Wall Street,” is a stockbroker who made his name dealing in penny stock trading, which made him millions in profit. Now, his name has a negative connotation because in 1999, he was convicted of manipulating the stock market and running a penny stock boiler room.
We are not here to promote penny stock scams, we just want to show you what can be achieved if you follow our penny stocks for beginners guide.
Before you release any of your hard-earned money, let’s learn about stocks and how you can buy them. By the end of this guide, you will know the right trading tips, methods and strategies to successfully issue penny stocks.
What Are Penny Stocks?
What is a penny stock? According to the United States Securities and Exchange Commission (SEC), penny stocks are shares in companies that trade below $5 five dollars. In the past, only stocks under $1 were considered penny stocks. Penny stocks are also referred to as “pink sheet stocks.”
Typically, penny stock companies operate outside of major exchanges such as the NYSE or NASDAQ. They are traded over the counter. However, if the penny stock price is consistently between $1 and $5 dollars per share, it can be listed on the NYSE.
If you want to know more about the OTC market, please visit Trade Over Counter – How to Trade Whales.
A second characteristic of penny stocks is that they have small market caps. These cheap penny stocks generally have a market cap of less than $300 million or $50 million.
Risks and Benefits of Trading Penny Stocks
There are many benefits of trading penny stocks. Because this stock is priced at less than $5, there is limited risk. The most you can lose is $5. By choosing the right stocks, however, you have access to unlimited upside. Although they are rare, examples of a stock rising from $1 to $100 within a month are not significant.
Penny stock price movements are also usually more volatile than common stocks. For today’s traders, this means that there are many opportunities for profit in a given trading period. Even if the stock only moves from $0.20 to $0.30, this is still a 50% increase in value.
Another benefit of trading penny stocks is that, unlike stocks listed in the S&P 500, penny stocks are closely related to the market as a whole. Even though the entire economy is in a recession, there are still plenty of penny stocks on the rise.
There is a downside to selling penny stocks. Many of these companies have very small (or negative) valuations, which is why their prices are so low to begin with. The majority of penny stocks will remain penny stocks. Also, because they are often traded over the counter and with little oversight, these stocks are prime targets for pump and dump or insider trading schemes. However, when managed properly, trading penny stocks can still be profitable.
Let’s dive into how to find penny stocks using this simple smart strategy.
How Can I Find Penny Stocks?
To find penny stocks, you need to use a penny stock scanner. The scanner will help you discover hot penny stocks hidden from the public eye.
The Finviz.com stock screener is our favorite free penny stock screener. This is the easiest way to find penny stocks.
A good penny stock issuer will allow you to scan for stocks under $5 or for stocks under $1 using customized parameters. You can find the best penny stocks to buy for 2019 that meet your specific parameters and filters. If you’re just starting to learn how to sell penny stocks, don’t be afraid to play with online stock screen tools that test different filters. This can lead to a strong list of penny stocks to buy.
If you’re not smart enough, try scanning the most active penny stocks in the premarket. This will give you a list for daily trading stocks.
Remember – Lack of research can lead you to invest in some pump-and-worst scams. Learn how to make money from penny stock trading down to putting in the time and effort. There is no secret formula for finding stocks before a pre-spike. But, learning how to find the right penny stocks can definitely increase your chances of success.
Now that you’ve learned how to find the hottest penny stocks, the next big question is buying penny stocks.
See below:
Where to Buy Penny Stocks?
Most of the listed stocks are listed on the OTCBB (over-the-counter) bulletin board, however, some of them can also be found on regular stock exchanges. Professional traders on Wall Street refer to penny stocks as over-the-counter stocks.
There are more than 10,000 securities listed on the OTCBB. Investors can trade and access pink sheet stocks through online stock brokers.
Because OTC stocks are highly volatile and illiquid, we recommend only investing in penny stocks listed on the NYSE and NASDAQ.
So, how do you buy penny stocks?
See below:
How to Buy Penny Stocks?
The best way to buy penny stocks is through a regulated stock broker. Brokers will get you access to the market with leverage, so you can start trading quickly. In addition to using a broker, learning how to buy penny stocks requires two more things:
- Money to buy penny stocks.
- Penny stock trading strategies to help you pick the best penny stocks.
Try to avoid buying penny stocks directly from dealers who call you to promote your investment opportunity. Try researching low-commission stock brokers that offer OTC stocks and penny stocks listed on the NYSE or NASDAQ. You’ll want to have a variety of options, so you can find the best stocks.
Here are the top brokers we recommend:
- Fidelity Investments – $4.95 per trade
- Charles Schwab – $4.95 per trade
- eOption – $3.00 per trade
- TD Ameritrade – $6.95 per trade
- Interactive Brokers – $ .005 per trade
- TradeStation – $5 per trade
What is the Difference Between OTC and NYSE/NASDAQ Penny Stocks?
Penny stocks come in two different forms, pink lock stocks and exchange penny stocks. “Pink Sheet” shares are published over the counter. Penny “Exchange” stocks are still priced below $5 but are listed on major exchanges such as the NYSE or NASDAQ. Blockbuster is a prime example of an exchange stock that eventually achieved “stock stock” status.
Usually, when people refer to penny stocks, they are probably referring to stocks that are traded over the counter. These stocks usually have a very small market cap and the market itself is highly regulated. Although the right pink sheet stocks can produce lucrative returns, they are generally considered riskier than those listed on major exchanges.
Now that you know about the two different types of penny stocks, the next step is to learn how to trade.
How To Make Penny Stocks?
Ever wondered how to sell penny stocks?
Anyone can learn the ropes of how to sell penny stocks for free. There are no hidden secrets because the game on Wall Street never changes. Penny stocks are characterized by great volatility. They can go from a few cents a share up to a few dollars very quickly.
You can make a lot of money from volatility, but you can also lose a lot of money.
Most people who trade penny stocks tend to lose money because they trade incorrectly or use penny stock trading strategies that are not suitable for their type of trading. That’s what makes penny stocks a high-risk, high-return investment.
At the end of the day, you have to remember that 85% of active traders lose money trading the stock market.
However, if you learn how to sell penny stocks the right way, you can loosen the odds in your favor and become part of the 15% of active traders who trade stocks on a profitable day.
All you have to do is learn how to buy penny stocks and find potential winners before they soar.
There are only a handful of hot stocks that make big moves every day. Not all stocks under $5 are hot stocks. The trick is to find penny stocks to buy pre-surge. We have developed a penny stock trading strategy that uses some of the trading rules we discovered 20 years ago.
If you want to become a better penny stock trader, try learning how to sell penny stocks using our methodology.
The Best Penny Stock Trading Strategies
The best penny stock trading strategy is broken down into three steps, scan, find and pull. The goal is to identify when a penny stock pairs. This is very important for penny stock traders. Even the best trading rules in the world can tell you what every penny stock will do in every situation.
However, if you use our “secret sauce”, you can predict with a high degree of accuracy when penny stocks will pump.
If you want to learn how to sell penny stocks, just follow our three S’s:
- Browse the best penny stocks using our 6 filters.
- Look for technical patterns.
- Strike using a market order.
Step #1: Scanning
Use the penny stock screener to find hot penny stocks. We prefer to use the free stock scanner offered by Finviz. Customize the penny stock screener to customize our parameters and filters. This will give you an edge in the market.
Penny stock parameters to find the best penny stocks:
- Market Cap: between $50 million and $300 million
- Target Price: 5% Above Price
- Current volume: Over 1M
- Country: United States
- Price: Under $5
- Technical: Price Above 200-day Simple Moving Average
If you use our penny stock filter, you have the potential to find penny stocks that will make a big run. As you can see, the penny stock screener only displays a few examples of penny stocks.
Once you have your list of penny stock watches, it’s time to look for technical patterns.
Step #2: Search
If the penny stock trader only displays a handful of stocks we like to look at all of them and see which of them provide clear technical patterns. If you are an experienced technical trader, you can use your skills to choose the best patterns.
After looking at our watch list, UUUU (Energy Fuels INC) stock is giving a clear price pattern.
We managed to find a neat rectangular pattern on this hot stock chart. You can never go wrong trade when you have a clear pattern.
After we pick up penny stocks that show clear price action, it’s time to pull the trigger.
See below:
Step #3: Attack
For entry, we are waiting for our rectangular pattern to be confirmed. Once we cross the rectangular resistance line, we pull the trigger and buy penny stocks UUUU.
The rectangle pattern is a super easy chart pattern to trade because it gives you very accurate entry points and risk points as well.
The key to trading any chart pattern breakout is to also watch the volume pick up as the smart money pumps penny stocks.
The Best Penny Stocks to Invest in for 2019
The list of the best penny stocks to invest in is constantly changing. Stock trading trends are mostly fast growing. However, here is a list of the best penny stocks with the highest daily gains for July 2019:
- SG Blocks (up 57.77%)
- FTE Networks Inc. (22.44% increase)
- Synthesis Energy System (19.48% increase)
- Innodata (up 17.39%)
- Taronis Technologies (up 16.28%)
- Iconix Brand Group (14.71% increase)
- Remark Holdings (up 12.20%)
- Sierra Oncology (up 11.04%)
Pro Tip – To reduce the risk attached to any particular stock, you may want to consider diversifying your holdings and buying several stocks at once.
Final Thoughts – How To Do Penny Stocks
Penny stocks offer opportunities that are independent of how the overall market works. Penny stock trading can be an important part of a diversified stock portfolio. But, before you put your hard-earned money to work, you need to find penny stocks that are more tradable and liquid than average.
Penny stocks are highly speculative, but this market can give you the possibility to make money if you learn how to trade correctly. Proper preparation, research, and scrutiny are required to succeed. Always do your due diligence, and be sure to try the suggested penny stock scanner settings for best results. We hope you enjoy this stock beginners guide.
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