The faster a stock moves, the higher the profit potential.
It lets you make more trades, and more profits, faster than long-term investing.
Just imagine making 10%, 20%, maybe even 30%…
Each and every day.
Long-term investing can’t do that. Only trading fast-moving stocks can.
And no stocks move as fast as a penny stocks…
How to Turbocharge Your Trades with Penny Stocks
Penny stocks are cheap shares, usually under $5, of companies with a market cap under about $250 million.
With a low price, anyone can buy these. And because they tend to have low volumes, even the slightest event can send these stocks to the moon…
That makes them perfect for traders looking to make money day in and day out.
Successful traders can even make this a full-time “job,” becoming financially independent…
Saying “good bye” to their boss and living their life their own way. All they is a smartphone or computer with Internet access.
They can live wherever, do whatever.
You could too.
Of course, anything that goes up must come down. Penny stocks are no exception.
That’s why it’s so important to have a good broker that can execute your trades fast…
So you can get out and capture you profits before the stock goes down.
Even more important is to have a trading technique that tells you when to buy, and when to sell.
That’s why we’ve put together this guide on how to best trade penny stocks.
Because whether you want to add a little bit of income to your retirement…
Boost your 401(k) or IRA…
Or quit your job and become a full-time trader…
There are just three simple steps you have to take.
(Editor’s Note: If you’re already set up with your broker and are familiar with basic penny stock strategies, you can skip to our very best penny stock trading strategy by clicking here.)
Step 1: Make Sure Your Broker Suits Your Trading Needs
Before you can start trading penny stocks, you’ll need a good broker. If you already have a retirement or investment account, that may work. But as a trader, you’ll want to pay special attention to your broker’s commissions and their trading platform.
After all, as a penny stock trader you’ll be getting in and out of positions often, maybe even multiple times a day.
Any broker that charges you high commissions on every trade will end up costing you a lot.
You’ll also want to make sure that your broker offers an online trading platform that lets you easily scan penny stocks based on a variety of technical indicators (don’t worry, we cover these below). This will let you quickly decide on which penny stocks to buy, and when.
With this in mind, it might be worthwhile to open a new brokerage account specifically for your penny stock trading. Merrill Edge, E*Trade, Interactive Brokers, and TradeStation all come highly recommended for traders by both Barron’s and Nerdwallet.
Now that you have a brokerage account, it’s time to start trading…
Step 2: Look for the Golden Cross
Probably the simplest, but still effective, trading strategy for penny stocks is to buy on the “golden cross” and sell on the “death cross.”
Sounds scary, I know. But don’t worry, it’s all quite simple.
Your broker’s trading platform will let you display something called “SMA” for any stock. “SMA” stands for “simple moving average” – it’s simply the average of a stock’s price over some period of time.
That time period can vary, but the two most commonly used ones are 200 days and 50 days.
Here’s an example of what that might look like on your broker’s trading platform:
What we have here is the price history of CalAmp Corp. (CAMP), an Internet of Things penny stock I picked out of my hat. The stock’s price is in blue, the 200-day moving average is in orange, and the 50-day moving average is in green.
Now, here’s how to use this to trade. The 200-day SMA will move slower than the 50-day, because it takes the average price over a much longer period of time.
So traders use the 200-day average to indicate the medium-term trend, and the 50-day to spot when the stock is breaking out of that trend.
What you want to look for is when the 50-day moving average crosses above the 200-day moving average. That’s called a “golden cross,” and usually shows that the stock is breaking out above its trend and is on the way up.
Let’s take a look at that image of CalAmp again:
On the right hand side, you’ll notice that the 50-day moving average crosses above the 200-day moving average.
And right after, the stock takes off like a rocket. If you’d bought the stock then, you’d be sitting at double-digit gains.
That crossover, the “golden cross,” is your buy signal.
It’s a good way to catch the up turns that have legs and will give you a good opportunity for profits.
But you also want to be on the lookout for when to sell and get out of your trade.
Now, generally, you want to look for when the 50-day moving average starts turning down. In our CalAmp example, you can see that happening at the right-hand side. That shows the stock is running out of steam, and that it’s probably time to get out.
That’s your sell signal.
And if you ever encounter what’s called a “death cross,” you’ll want to sell even faster. Because it’s a very bad sign.
Let’s look at the left side of our example:
TradingView.com
As you can see, on the left side the green 50-day moving average crosses below the orange 200-day moving average. It showed that the stock’s drop wasn’t temporary…
And that the recovery would take months.
The “death cross” is your signal to stay away.
Now, this popular crossover strategy is simple and will get you started trading penny stocks for some nice gains.
But if you want to up your game and go for the big profits, take a look at the next step…
Step 3: Download Tim Sykes’ Free Penny Stock Checklist
He turned $12,415 into $5,015,000 by trading penny stocks.
And now, Tim Sykes is revealing his free Penny Stock Checklist. It has everything you need to know to get started with penny stocks…
Completely free-of-charge.
He’ll even share with you a little-known penny stock trading technique, that works great even if you don’t have a lot of money to get started…
It’s something you can begin using today and you could see the proof in just a minute.
Just click here to get your copy of the Penny Stock Checklist.
Look, Tim got started trading way back in high school, without much money to his name.
He knows what it's like to start small while wanting to have the potential to massively grow your portfolio as quickly as possible.
In his free Penny Stock Checklist, he’ll show you exactly how to get started and achieve the kind of success he’s enjoyed.
To get the checklist completely free-of-charge, click here.
Franklin Jay is the founder and editor-in-chief of ProfitableNews.com and an an award-winning writer and researcher with many years of experience covering financial markets. Educated abroad before earning his doctorate at the University of Missouri, he worked as an analyst, researcher, and writer at one of the largest financial publishers in the U.S., specializing in energy/commodities markets.
