Author Topic: Tips to Actively Trade Penny Stocks  (Read 505 times)

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Tips to Actively Trade Penny Stocks
« on: May 27, 2012, 12:36:51 AM »
Tips to Actively Trade Penny Stocks

You can indeed actively trade penny stocks.You can buy and sell stocks based on short-term events and price fluctuations the way a day trader would day trade established stocks. There are many way to day trade penny stocks. They are all challenging and require persistence and optimism. You need to be persistent since it will take time to develop your own personal trading method. The optimism is important to motivate you at the beginning when your first few trades do not go the way you wanted them to go.

One form of short-term penny stock trading is based on the daily press releases. You can scan the headlines of all the press releases every morning before the market opens. Based on this initial scan, you can pick out a few favorite releases for the day and watch the pre-market activity for the stock prior to market opening at 9:30.

If the market makers have not brought up the price of the stock, you could place an order. Then after the market opens and after an hour or two, if the press release was as powerful as you expected, you could sell out of your position.

Another method is to buy penny stocks in the last 20 minutes of the day when all the day traders are closing their daily positions. You are looking for 10%+ drops in the price when the day traders exit their positions. You buy the stock and place an order to sell the stock the next morning as soon as the market opens. Penny stocks will most often open up a few percentage points higher than they closed the previous trading day. By selling the stock right after the market opens, your have tried to capture the previous day’s last minute 10% drop in price… and today’s increase in price.

The next method is buying a stock on a dip. This is when you buy a stock after it has dropped and now has started to recover. You can look for stocks that have experienced a sharp increase at the beginning of the day and now are being sold off. When the stock starts to stabilize you can call in an order and try to buy it for a cent or two below the current price. If you catch it at your limit price you can then place another order and sell the stock for a few percentage points more than you bought it for.

These are just a few strategies to catch some hot penny stocks and make short-term gains. Done consistently, several short-term gains add up. Remember to do your homework and use limit orders to mitigate losses when you’ve miscalculated or you’re wrong. | Your smart guide to money matters and entrepreneurship.

Tips to Actively Trade Penny Stocks
« on: May 27, 2012, 12:36:51 AM »

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