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Forums > Penny Stocks Stocks below 5 > Penny Stocks on the Move Navigation:
  • finding explosive potential penny stocks.(2) Replies

    Bronze Member
    Join Date:02-19-2014
    Saint Marys, Georgia
    United States
    Posts: 3
    Replies: 1
    finding explosive potential penny stocks.2/20/2014 11:39:10 AM
    Very new to stocks. I don't have! Much to invest. any great tips on finding those penny stocks about to explode
    • Finding Penny Stocks(0) Replies

      Trade Ninja
      Bronze Member
      Join Date:01-10-2014
      El Paso, Texas
      United States
      Posts: 10
      Replies: 15
      Finding Penny Stocks2/26/2014 9:00:45 PM
      First I will say that Penny Stocks are much riskier to play than higher priced stocks.  I will also say from experience, that a couple wrong decisions with penny stocks can wipe out your trading capital.

      The most important thing to remember is:  I you get wiped out, then you will be out of the market by the time you learn the techniques to making consistent money in the market.

      I totally understand that you may not have much money to play with...we all have to start somewhere.  I remember starting with my first $1000 and I was so exited to jump right in and turn that into my first million!  I still remember my first trades of 20 years ago...yes, trading for the first time is TOO exciting!

      I jumped into penny stocks.  Back then it wasn't as easy to get in and out...I actually had to CALL a broker and issue my order over the phone...oh how terrified I was.  I didn't know what I was talking about, but I didn't want my broker to know that...I am positive he did, but not sounding like a "newbie" was important to me then.

      Nobody likes to be the newbie.  But hey, everybody has to start somewhere and I hope that I can help all of you by helping you avoid the pitfalls that I fell into.

      Penny Stocks...where to find them.  You can use Google's stock screener to search for penny stocks.  It is also possible that your online broker has a stock screener build in to their trading platform.  You can also find all sorts of penny stock pushing websites.

      FINDING the penny stocks is NOT the difficult part.  Trading them IS.  I personally don't recommend you start with any stock that is less than $0.75.  And DEFINITELY not less $0.25.  Do I play those?  Yes, I do, but I have a bit more experience with it.  With penny stocks your entries and exits have to be very precise or you stand to lose a lot of money quickly.

      I know this was not your question exactly, but I hope you will accept my warning that stocks that are priced below $0.75 should be avoided when you are starting to trade.

      Some of the same reasons I LIKE penny stocks can kill a beginner...

      Penny stocks move quicker (by percentage of stock value) than higher priced stocks...means your returns will be larger if you catch it on the right side.  It also means your losses will be larger if you don't.

      Before you decide that penny stocks are the way to go, please consider this:

      Trade #1:  A stock that moves from $10 to $11 is a 10% return.
      Trade #2:  A stock that moves from $0.10 to $0.11 is a 10% return.

      If I have $1000 to invest and I invest it in Trade #1, I can purchase 100 shares of stock.  I make $100 on the deal which is a 10% return.

      If I have $1000 to invest and I invest it in Trade #2, I can purchase 10,000 shares of stock.  I make $100 on the deal which is a 10% return.

      The point...????  Don't get too caught up in having to purchase MORE SHARES because what matters really is how much (%age)  the stock moves.

      It is much better (especially when beginning to trade) to look for stocks at whatever price that you expect to MOVE!  I look for stocks on the MOVE and not the number of shares I can purchase.

      I got caught up on that too when I was beginning...I always opted for the lowest priced stock so I could buy the most shares.  I also lost my first $1000...and my second...and a few more after that until I realized that my objective was to trade defensively.  After all, how could I eventually make a living in the market if I didn't have any money???  In order to make it, I had to LAST!

      I hope that helps...and sorry I deviated from "Where to find penny stocks" to "Should you reconsider playing penny stocks".  I hope you don't hold that against me ;-).  I really want you to succeed!