Day Trade Penny Stocks

Lili Pelagius July 20, 2022 Forex

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Alton Hill is the Cofounder of. She has a passion for helping people and she finds that one way to do that is through the world of Day Trading. Alton’s skills in Product Development and Design are used to provide overall knowledge for.

Highlights Story Table of Contents Step 1 – Initial focus on hot stocks Step 2 – Filter down using volume Step 3 – Avoid stocks of very high and low volatility Step 4 – Find stocks with tight spreads Step 5 – Trade GLUU AEZS UGAZ setup in the Highlights Summary Penny stock trading requires a systematic approach to finding and trading the best opportunities in the Penny stock market unlike other securities because price movements can be very volatile The use of Fibonacci extensions is a key tool for hidden support and resistance levels to overcome. chart If you are looking for action in the market, you will certainly find it trading penny stocks. There are several paid services out there that claim to have a secret sauce for trading penny stocks. Although some of these services are also beneficial, I believe that with the right balance of money management and risk tolerance, you can also find the key to unlocking profits without spending thousands of dollars. In this article, we provide a step-by-step process for basic penny stock trading that eliminates the complexity of trading these instruments. Step 1 – First focus on hot stocks So, how can penny stocks be used, and how do you find them? If you’re looking for penny stocks, you can find anything for under $ 5 dollars. This will likely result in a long list similar to the one below. Penny Stock List This list is just a few of the penny stocks listed on the NASDAQ. Once you add in the NYSE and AMEX and, the number of Penny stocks can easily be in the high hundreds. You can also see from the list of penny stocks that some people have low volume. Penny Stock Volume Less Yes. You read the volume statistics correctly, less than 10,000 shares sold in a day. The process of narrowing down the list of available stocks from hundreds to the highest rated stocks is very simple. You need a tool to screen the market for high penny stocks that are trending for the day. To see a real example, let’s look at the market action since March 17, 2015. Using the market movement screener in the app, we can quickly see the stocks going up and down with a sufficient volume. In the major index, 4 penny stocks are down. Largest Percentage of Losers On the other hand, there are four stocks on the list of biggest gainers. Largest percentage of gainers For you hoarders out there, I found that GLUU is just over 5 dollars, but since this photo was taken at 9:34:13 am, GLUU could easily return under $ 5. For this reason, we remain on the list for review. Step 2 – Filter down using measurements We went from a list of a few hundred, down to eight and now we need to narrow down the list of penny stocks further. The next quick way to refine our list is to remove penny stocks with small volumes. From an article on how to trade the most active lists, I mentioned that I need stocks to trade more than 40,000 stocks on average per 5 minute bar. Let’s examine the list of biggest losses under these terms. MCP-Volume PLUG-Volume CYTX-Volume AMRN-Volume As you can see, each stock has more than 40k shares per 5 minute bar. Therefore, based on volume, we cannot remove any penny stocks from our list of eligible. Let’s now look at the volume for the list of top gainers. AEZS-Volume GLUU-Volume ANTH-Volume UGAZ-Volume Like our biggest losers, our biggest winners are also heavy on the volume side. We still have some work ahead to sign on the management list. Step 3- Avoid very high and low volatile stocks For those of you who follow blogs, you know that I like adjustments between +/- 5% and +/- 12%. MCP – Very low Based on these criteria, we can remove MCP from the list because the stock is down more than 12%. We can push to remove AEZS and GLUU; However, this is almost close to the bottom 5%, so tracking a few tenths of a percent is useless. Nearly 5 percent Based on the removal of MCP, we can reduce the list of penny stocks from eight to seven. Step 4 – Find stocks with tight spreads Now let’s look at bid / ask spreads as the next way to identify the best opportunities. If a penny stock is more than a 1 or 2 percent spread, you need to think about the level of risk in the trade. Let’s look at the seven remaining stocks to see how they bid / demand. UGAZ – The UGAZ spread has a 1 cent spread, so it’s not here. ANTH-Spread ANTH spread is more than 1% and we do not trade options. So, ANTH is officially out of our list. AEZS – SPREAD AEZS trades at less than a penny spread, so keep trying. GLUU – The GLUU spread is still on the hunt as well. For a quick recap, after checking the distribution of the biggest winners, the list is now down from seven to six. Now, let’s look at the biggest distribution of losers. PLUG – Spread PLUG passed the sniff test. CYTX – The CYTX spread is still playing. AMRN – Finally released, AMRN is still playing well. Analyzing stock price, volume and spread is something that can be done quickly without paying the developer to write a special scan. Now, we need to dig into the volatility characteristics of penny stocks to see how we measure our risk tolerance regarding day trading strategies. To measure volatility, I like to use the average range for each stock volume. As I mentioned in a previous article, ‘How to Trade Volatility’, I like to divide the value of ATR by the stock price to get the volatility ratio. The following are areas that have been developed over the years to measure variability: (1) Low Key = .001> .005 (2) Middle Key = .005> .01 (3) Search for action => .01 I tend to to stay in the middle of the road and occasionally flirt with the top end of the .01. Let’s use this logic in a set of stocks to see where they fit into a predetermined risk area. Amrn Track Value Price Ratio 0,0543 2,66 0,0396 2,028 096 096 096 096 096 096 096 096 096 096 096 UGAZ. Step 5 – Trade Setups At this point, we have managed to apply the necessary filters to cut down the list of penny stocks we can buy to a manageable size, now is the time in evaluating the technicians to see how to trade penny stocks. For those readers who follow my blog, you know I don’t post trades until 9:50 am. This allows me to avoid the first 20 minutes, but allows me to enter a trade before the daily market turnaround time of 10am. In addition to the timing element, I also look for tight consolidation patterns that hang above resistance or below support that are close to break out. Let’s dig into the GLUU, AEZS and UGAZ charts to see how to measure the desired day trading scenario. GLUU GLUU had a nice gap up and then came back from the top and ate into the gap in the morning at 9:50 am. GLU-CARD I trade breakout tactics, that’s my bread and butter. So, I had to cross the GLUU in the morning at 10:10 (which is why I couldn’t start a new trade). As you can see from the GLUU chart, the stock is not so high and actually closed the gap to close the day. Based on this price action, I would not place a trade on GLUU because the system gets new stock highs between 9:50 and 10:10. Now that I have clarified that I will not make trades based on my trading system,