Penny Stocks Trading

Penny stocks for beginners

What are Penny Stocks?

Penny stocks are shares of a company that trades for low amounts. These stocks usually between $0.01 to $2.00, and most of the time, the price doesn’t exceed 5$ per share. 

Most of these companies are new, so they often have no track record as successful businesses, which makes them speculative investments for traders and investors. 

Unlike the other stock markets, penny stocks have low liquidity because of the lack of demand and supply, so the trader should pick the right penny stock at the right time. Don’t worry! we will help you to do that by providing our daily analysis on

Penny stocks features: 

Most of the penny stocks companies are trading off the major market exchanges such as NYSE and Nasdaq because they have listing requirements for the new companies.

As I mentioned before, these stocks have low liquidity, especially in penny stocks that are trading off the major market exchanges. 

Penny stocks have limited historical and financial information, such as the overview of assets, liabilities, and business activities.

 On the other hand, and when it comes to the technical analysis, it will be difficult to trade it due to the lack of the previous price movements in the chart. 

Are penny stocks profitable?

The short answer is yes. The low share prices allow the investor to buy thousands of shares for a relatively small capital amount. So, a few cents upside movements in the share will give him big profits as a result (the reverse is also true, of course).

However, as easy to make profits, it is just as easy to lose all your invested trading capital, due to the high volatility in the penny stocks market.

Penny stocks tiers:

There are three main penny stocks tiers:

Tier 1 Penny Stocks: This one is the best, and I like to focus on these penny stocks. They are listed on a major exchange such as NYSE or NASDAQ, and the average price can range between $1 and 5$ per share.

Tier 2 Penny Stocks: are stocks priced between $0.01 and $1 per share. As I mentioned above, they need to meet the listing requirements to have their stock above $1.00 within a certain amount of time, and if they can’t do that, they will be de-listed and move to the OTC market exchange.

This tier can give you good profits if you pick the right one, and of course if you were lucky too.

Tier 3 Penny Stocks: Penny Stocks are stocks that are below 1 cent per share, and I don’t recommend buying these stocks because it’s not worthy. It’s better to invest your money in some cryptocurrency rather than investing in these stocks.

Trading Penny Stocks For Beginners:

First of all, don’t think that you will become a millionaire in one day by investing in some penny stocks. It is possible to become a millionaire By trading the cheapest penny stocks on the market, but it’s not that easy.

Many people lose their money by trading penny stocks due to the high risk and high expectations. 

So, the first thing you should learn is how to control your risk level, and one of the most important things is don’t invest your money in just one share, it is always better to invest in multi stocks. 

After learning how to control your risk, you should focus on fundamental analysis, then technical analysis (price action, trading patterns, Elliot waves…etc)

Don’t forget about following the companies news, a penny stock company can have a bad balance sheet and financial data, then spike up 200% on breaking news.

 How invest in penny stocks for beginners?

Do your own research: it’s easy to find the top penny stocks, but most important, will they give me good profits? So, your research and analysis will help you with this. 

Choose a broker to trade with: there are many online brokers that allow you to trade penny stocks, I think Robinhood, TradeStation, and TD Ameritrade are still one of the best online brokers for beginners. 

You can find more penny stocks brokers by searching on Google.

Start trading: if you made it this far, I think you are ready to start trading and making some profits! 

Have good luck!

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