Penny Stocks – A Simple 7 Point Strategy

Website design By BotEap.comFirst of all, what is a Penny Stock?

Website design By BotEap.comThe Security Exchange Commission (SEC) defines a penny stock as anything priced below $ 5. These are stocks that are riskier in nature. They are on a fine list and can move up and down quickly. These are not your top-of-the-line stocks you invest in and you don’t look at them again for a year. These are stocks to trade! The advantage, of course, is that risk goes hand in hand with performance. People have lost fortunes with penny stocks, but they have also made fortunes, and sometimes in a very short space of time. First of all, some points to keep in mind, BE CAREFUL about placing market orders. These stocks, by their very nature, are sparsely traded. You want to LIMIT buy and sell orders. If you don’t, you will most likely get caught. Now let’s move on to the basic strategy that I will present to you today.

Website design By BotEap.comFirst you will need a Market Screener, there are many free ones available and I recommend Yahoo Finance Screener, it is complete, reliable and easy to use. Once you have your filter, you will need to select the type of actions we are looking for.

Website design By BotEap.com1. We are looking for penny shares, these are shares of less than $ 5, so we want a share equal to or less than this amount.

Website design By BotEap.com2. Next, configure the market cap filter. Generally, a microcap stock between $ 50 and $ 300 million is considered. However, we are looking for penny stocks, so we will set our filter to less than $ 100 million. If you’re having trouble finding stocks that meet the other criteria, this market evaluator can move into mico cap territory.

Website design By BotEap.com3. This strategy looks for stocks that are a little underprivileged at the moment. We want our actions to be cheap. So next, set the filter for stocks that have shown declines in the last year. We can do this because with our other evaluators we will look for signs of value.

Website design By BotEap.com4. We want stocks that show positive earnings growth. Set up the evaluator for positive earnings growth.

Website design By BotEap.com5. Next, select stocks with a PEG of less than one. PEG is slightly preferable to PE as it incorporates growth. A PEG of less than one suggests that it is slightly undervalued.

Website design By BotEap.com6. Set your sales volume at more than $ 500,000 per day, with penny stocks it is important that you have enough volume to trade. If you don’t have trading volume, it doesn’t matter how good a stock is.

Website design By BotEap.com7. Finally, set the sales volume to a minimum of 1 million. Sales are less easy to manipulate than profits

Website design By BotEap.comAnd there you have a simple 7 point strategy for investing in Penny Stocks. Please note that this is just a starting point for investing in Penny Stocks. It is ONE way of selecting stocks. You will also need to know how and when to EXIT the share.

Website design By BotEap.comAs I mentioned, Penny’s first actions are RISKY, but there are also great REWARDS. There are many examples of people who have made fortunes at a young age with Penny Shares. A well-known example is Timothy Sykes, who made $ 2,000,000 while still in his bedroom. Then he created a hedge fund that collapsed (the risk exists), but came back. Another example is James Connelly or the “Penny Stock Prophet” as it is known. While he was still in college, he came up with a strategy that could turn $ 1,000 into $ 1,000,000 in 38 trades. His work is based on quantitative behavioral finance, which is basically the effect that human psychology has on the price of stocks.