Do you know where to find penny stocks? The best way to find them is to use a good day trading scanner like Trade Ideas, or Finviz. Set your scanning filters to hunt for stocks that are gapping up in the premarket at least 4%. If the market is open make sure to have your HOD (high of day) scanner running. Using a good breaking news resource like Benzinga is really helpful as well.
- Here’s how to find penny stocks to trade:
- Use a good stock scanner like Trade Ideas, Finviz, or Black Box Stocks
- Scan the pre-market for stocks that have high volume
- Look for at least 100,000 premarket volume
- Compare volume with high relative volume (RVOL)
- Scan the market at open for high of day momentum plays
- Know the differences between OTC/Pink Sheets and Nasdaq penny stocks
- We also update our penny stocks watch list daily
- Alerts setups are included for members
- Also, check out our lists of most popular penny stock sectors
Penny stock trading is a sector that is attractive to many people; especially new traders. The goal is to take that small amount and grow it. Penny stocks are cheap and promise large profits with little capital. What makes a penny stock a penny stock?
It’s any stock that trades under $5. The majority trade under a $1. Hence the name penny stocks. Penny stocks are very risky because they’re not regulated.
Learn how to manage your risk, because yes you can make a profit. However, you can also really hurt yourself trading this sector.
To use penny stock trading strategies you need to know where to find penny stocks. However it’s important to know that this sector usually has large bid/ask spreads which can make it hard to get out of a trade. There isn’t a lot of liquidity also making it hard to exit a trade.
Finding penny stocks can be difficult. You should always research the companies for yourself. Never ever take someone at their word in this sector. It’s rife with manipulators and pumpers. Doing your own research greatly adds to your chance of success. The stocks that trade from $1 to $5 are typically going to be traded on the major exchanges such as the NASDAQ.
The major stock exchanges have listing requirements. If the stocks listing price is under $1 they’re usually delisted. When you can’t find penny stocks on major exchanges, they trade OTC (over the counter) or pink sheets.
Over the counter stocks are a little more legitimate because they have some listing requirements. However, the pink sheets don’t. They’re not registered with the SEC so they’re much more risky.
You want to know where to find penny stocks? The internet. Online there are websites that have lists of legitimate penny stocks. With that being said, make sure its not a scam.
That may be the biggest issue with penny stock trading. It’s also how manipulators get you. You can sign up for newsletters and emails but that’s where they get you.
Since the majority of penny stocks are pink slips and OTC, they’re not traded on the major stock market exchanges. This means once you’ve found penny stocks you’re interested in, you have to research each individual company.
You may have to look at a lot of websites while doing your due diligence. It’s going to take time and effort, but overtime, you’ll get faster at it.
Avoid the Scam
When you come across a penny stock, whether online or recommendation, consider it a scam until you do your research. Did you know that promoters get paid to get you to buy a stock? Remember that when finding out where to find penny stocks.
It’s more probable than not that they don’t actually own that stock. Instead they’re being paid to get you to buy shares. Look into the company. Look at their financials, their management, their debt.
This information may be hard to find. However, the more you’re able to find, the better it is for you. Look to see where the stocks are traded. Any penny stock not traded on the major exchanges is open to price manipulation.
Verify the claims of people promising huge upswings in price. Usually they have a reason such as a drug approval or something in their company going public. The news is bait. It’s how they suck you in.
Back up any claims from legitimate sources. Always be skeptical. It’s how you survive. If something is too good to be true it usually is. You’re not going to get rich quick. It takes hard work and practice.
How Do You Tell If a Penny Stock Is a PUMP and Dump?
- It’s not hard to tell if a penny stock is a pump and dump because most penny stocks under 20 million float are pump and dumps. Watch for news catalysts, high relative volume and then the pump. When price action gets really overextended be aware of the head and shoulders pattern that dumps price action. These are typically gapping stocks that pop in the premarket but dump at the open.
Charts Don’t Lie
The importance of patterns gives you a better understanding of where to enter and exit a trade. Cup and handle patterns and head and shoulders patterns are going to have you make different trades.
Do you know what tweezer top patterns or bearish harami patterns mean? You have to know these patterns, what they look like and mean to be a good trader.
Knowing if a stock has a bullish or bearish bias will change the way you trade. A stock that’s going bearish might have you sitting out or shorting.
If a stock is at resistance then wait for a pullback. Buy the dip sell the rip is a good rule of thumb for penny stock trading. Look at the moving averages, RSI and MACD.
When you know where to find penny stocks, you can make money on the pump. Don’t fall in love with or get attached to a penny stock. Instead profit on the pumps and get out before the dumps. Hence the need for the technical indicators and patterns.
If you need more help, take our day trading course.