How to Buy and Sell Penny Stocks

Do you know how to buy and sell penny stocks? Penny stock trading is an attractive strategy to many traders, especially new ones. Day traders search for momentum stocks that are gapping up at least 3% over previous close, with a news catalyst. At open, traders are hunting for volatility and huge volume spikes. Bull flags and ascending triangles are great patterns to trade momentum.

How to Buy and Sell Penny Stocks

  1. Simple steps on how to buy and sell penny stocks:
  2. Have a good stock scanner that scans the pre-market for gapping stocks
  3. Filter stocks by minimum of 100K premarket volume
  4. Search for a company news catalyst using google or benzinga.
  5. Create a watch list of a handful of stocks to watch at open
  6. Watch for huge intraday 1 and 5 minute volume spikes at open
  7. Watch if price action can break premarket highs
  8. Look to take potential entry on bull flag pullbacks to support or retest highs and hold
  9. Take positions off of small candlesticks
  10. Keep risk management tight and let your runners run


Why is penny stock trading so attractive to traders? It’s an inexpensive way to make money. As a result, if you’re new and learning how to invest in the stock market with little money you might think penny stocks are a great way to make a lot of money.

That may be the case but there is also a lot of risk involved. It’s important to know this sector works so you put yourself in the best position to profit.

When learning how to buy and sell penny stocks there are a few important factors to consider. There is the allure of inexpensive stocks that promise big rewards. Who doesn’t want to make a lot of money without having to spend a lot?


How to Buy and Sell Penny Stocks

However, while you can make money, you can also lose it. You might be asking isn’t that how it is when trading anyways? Yes but penny stocks are extra risky due to manipulation and pumpers. When trading this sector you need to make sure you have excellent penny stock trading strategies. If you have a strategy that works, stick to it! That’s how to buy and sell penny stocks.

In fact, don’t let greed take over. That’s the perfect way to give back your gains. If you can’t afford shares of large companies this looks like a good trade off. Hence the need to apply strict risk management.

One of the most important things you can do is your own research. In fact, don’t buy and sell penny stocks based off other people telling you too. You have to ignore the success stories.

If the promise of riches is coming through newsletters or social media, do your own research. In fact, that’s the most important thing when learning how to buy and sell penny stocks.

Need stock training? Take our stock market trading courses.

Don’t Listen to Tips, Read the Disclaimers and Sell Quickly

Learning how to buy and sell penny stocks isn’t just about hitting the the buy or sell button. In fact, there are a lot of penny stocks sold based on tips by the pros. If you look at the essence of penny stocks, there is a lot more selling happening. Why? Look at the newsletters.

If you read the disclaimer at the bottoms of these newsletters, you’ll see that these people get paid to pump these stocks. Hence the need to be super careful buying a penny stocks based off of a recommendation.

The majority of these companies are small, burgeoning companies or just straight up crappy ones. However, if their stock runs it’s probably not on earnings but because a few people kept pumping it.

If you do get into a stock being pumped, take your profits. As a result, don’t hold on trying to make a million dollars. You can’t go broke taking your profits. However, you will go broke trying to win the penny stock lottery. Hence how to buy and sell penny stocks.

Take your profits and move on to the next one. Before you know it, you’ll have the money to trade the large cap stocks (learn how to trend trade in our free courses).

Don’t Buy the Hype

How to Buy and Sell Penny Stocks

A lot of penny stock companies are new or small companies claiming big things. For example, there might be a biotech company taking about FDA approval to a life changing study.

Get in on the action now. This drug is life changing! You buy now and within a year this stock is going to be up to $20. How many times have we heard that? A lot. How many times has that happened? Rarely.

As a result, don’t buy the hype. There’s a good chance you’ll be holding a stock for a long time waiting for that move. These companies need the hype. They need your money to stay in business.

Don’t fall in love with a penny stock either. It’s easy to be taken in by the hype. Falling in love with the penny stock hype is going to burn you. Always look at the charts and do your due diligence; even if it’s friends and family hyping the stock.

How Do Beginners Buy and Sell Penny Stocks?

  1. Here’s some simple steps for beginners to buy and sell penny stocks:
  2. Choose a penny stock broker
  3. Choosing trading style preference: long or short
  4. Basic broker: TD Ameritrade and Interactive Brokers
  5. No PDT broker: UStockTrade and CMEG
  6. Good shorting broker: SpeedTrader, Centerpoint, LightSpeed
  7. Scan for momentum plays with a good scanner
  8. Create a watch list
  9. Look for breakouts and breakdowns
  10. Practice paper trading before using real money


Knowing how to buy and sell penny stocks means nothing if you can’t read charts and patterns. The stock market is a battle of the bulls and bears. This battle forms patterns. Patterns are what traders trade.  Read our post on how to read stock charts for beginners.

Japanese candlesticks patterns help to form support and resistance as well as give bullish and bearish directions. You may hear pro penny stock people tell you the charts don’t matter.

You have to ask yourself why they’re saying that. Most likely, they’re pumping a stock and hoping you taken them at your word without doing any research. Take our candlesticks patterns course to learn how to trade them.

Bottom Line on How to Buy and Sell Penny Stocks

Learning how to buy and sell penny stocks is risky business. Learn how to manage your risk and you can profit from this sector. Practice in a paper trading account before using real money. You may find that you love the penny stock sector or that this isn’t the sector for you; all while keeping your brokerage account safe. Thanks for reading!

One comment on “How to Buy and Sell Penny Stocks

  1. Gerald c Henrick on

    hi i got into a penny stock 2 years ago it really didn’t go anywhere, but what was interesting was every time the company made a positive statement the stock would start to go up, i got lucky and sold on an upswing and of course the chat room kept hyping the stock, it surprised me that people kept buying on those upswings as they would always go back down, that stock is now defuncted, but i made some good money on just that one upswing. So my question becomes if that stock had those run ups then there must be other penny stocks that we can do the same thing with, until it collapse’s, so where and how do i start finding those?

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