Characteristics of penny stocks

As you know, penny stocks are very specific kind of stock. There is high risk, but you can earn huge money as well. Anyway, if you want to be successful, you have to know penny stocks characteristic.

1. Penny stocks are very risky. I don’t want to hold shares more than one day. I recommend intraday trading.
2. The highest volatility is during first minutes from open market.
3. You can trade penny stock on several market place. If you want to decrease risk, you will trade on Nasdaq or NYSE. Skip OTC market.
4. Trade penny stocks which has high volume. You can have trouble, if you buy stocks with low daily volume.
5. Be carreful. Have you ever heard about Pump and Dump technique? On the penny stock market are bad boys players as well. Because of this players you can lose your money. Please, learn more about this technique on Internet.
6. Long period penny stock sleeps. There is not price movement. But one day stock jump up or down. Why? What is catalyzator? It is news, earnings, new product, etc.
7. High volume, signs that a lot of people are interested in the company.
8. Never forget to use stop loss. You have to know, what will be your loss. Dont afraid lose money. Next trade will be successfull. You have to set positive risk reward ratio.
9. Buy the rumor, sell the news.
10. You can assume, penny stock could grow 10-50 percent in hours or days but not 200-300 percent gains.

 

Based on penny stock characteristics, we can build strategies.
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