Best Penny Stocks To Watch
All my friends that are interested in stock marketing investing and trading always end up asking me what I know about penny stocks. There is lots you need to understand about penny stocks and how to the know the Best Penny Stocks To Watch. Market psychology plays a much larger part in the nano/micro cap market then actual technical analysis. I’ve told people so many times about what to do when playing around with penny stocks that I feel qualified to write this article. I’ve also traded some penny stocks for over 30% swings.
For this article I assume that you know what technical analysis is, if you don’t please buy Technical Analysis for Dummies and then return to this blog.
Penny Stock Screener
The first thing you want to do in building your penny stock list is use a stock screener. I alternate between using the Google Stock Screener and the Finviz Stock Screener. Each one has it’s advantages and disadvantages. I like the large screen of the Finviz Stock Screener and the options to categorize, Google just isn’t there yet.
Set the settings of Finviz to only show stocks below the price of $1. This is the main setting we will be working with.
Now that you have the website showing you only penny stocks you have to decide what kind of approach you will use to find the valuable penny stocks. Penny stocks can be confusing to trade using Fundamental Analysis because penny stocks will usually show a negative net profit margin.
Technical Analysis and the following parameters can give you a few ideas on what to look for:
- Relative Strength Index (RSIAvg Volume (High Volume Means The Stock Will Gyrate)
- 52 Week Low (If It’s Close It Could Mean It Could Bounce)
- Visible Support Lines (Buy At The Line Because Of Visible Institutional Shorting)
Just like there is no way to predict where the market will truly go you can only use guides and indicators to help you. Just as large cap stocks can be brutal, penny stocks are much worst and that is why most investment books only teach $5+ stock investing and trading. You have to understand that the lower the price of a stock goes, usually the swings in sentiment will also follow with it.
You also want to look out for any report that is going to hit the market. What has become a repeatable investment and trading for some people is buying the penny stock 10-20 days before they are releasing their quarterly report. Stocks usually go up before the day of a report, if you trade this properly it can work out for you.
Going Positive Net Profit Soon
Truly the best penny stocks to watch are the ones that are going to go net profit positive soon. As of writing this article Sirius Radio was one of the penny stocks that was net profit negative and went net profit positive and shot from 0.25c to over $1. I have a few stocks that I’m watching to see if the pattern is repeatable.
I can’t tell you any specific techniques, only signs that CAN show what makes good penny stocks. Anyone telling you a system or pointing out which penny stocks to buy is usually nothing more then a pump and dump. Please Google ‘pump and dump’ if you do not know what it is. I will be adding more to this article as I come up with new ideas and indicators that can be used.