Have you ever been curious about how to day trade penny stocks? If you have ever watched the Wolf Of Wall Street I’m sure you have had some sort of desire to get into the stock market (but doing it legally).
That lifestyle (believe it or not) actually exist in the stock market.
You just have to be willing to put in the time to study & be comfortable with risk.
Not everyone is going to be successful in the stock market & that is because of two things.
Most day traders buy junk stocks & they take position sizes that are way too big.
This post should simplify some basic topics & my basic thought process every morning.
This is just a warm-up post before I release all of my insane penny stock trading strategies & thought process I use every single morning Monday-Friday.
If you want to get on the waiting list of available memberships to learn how to trade penny stocks, use the button below to put your email in if you are not a student of mine already.
GET NOTIFIED WHEN MEMBERSHIP IS AVAILABLE.
I truly value my customers privacy & will never spam you.
The reason why I believe it’s easier to trade stocks under $5 is that big institutions (banks/hedge funds) that usually manipulate every other asset class, don’t mess around with stocks that are under $5.
Unless the company is an incredible value play or a growth play.
They are very long-term investors & do not want to be dealing with the volatility & the uncertainty of these sketchy companies.
Their main focus is to make money for their investors and the company, not risky investments.
So they stick to big blue-chip companies that are strong. (Apple, Netflix, Amazon etc…)
Banks & hedge funds can buy an insane amount of shares of these companies because they have such a large float with daily and weekly volume to back it up.
(Knowledge dropping: What is stock float & volume?)
Stock Float: Shares available to the public to trade
Volume: Shares exchanged between investors through any given time
*Larger the float, the slower it moves*
Fake Example – Apple has 1,000,000,000 shares available to the public (stock float) & daily volume is 100,000,000 – banks & hedge funds could buy 1,000,000 shares daily and be able to get out of the position with no problem without really moving the market.
Fake example #2 – Apple has 10,000,000 shares available to the public (stock float) & has 100,000 daily volume, if they wanted to buy 8,000,000 shares it would be borderline impossible to exit in less than a few days, because there is not enough people trying to buy it (only 100,000 shares were traded a day.)
So…with that reason alone, they won’t be day trading penny stocks often.
Banks/Hedge funds want to buy absolutely huge positions in super strong companies, to reduce as much risk as possible for their investors while still making a ton of money since they can buy so many shares of amazing companies, they don’t need the penny stock junk.
They want hundreds of millions of dollars in profit a year, not just a few hundred thousand.
They would go out of business trading penny stocks (not because, you can’t make money in penny stocks, they just need way bigger positions due to their size & regulations).
Banks/ Hedge funds mainly focus on fundamental analysis (which is fantastic to use, just not for quick money usually).
They are trying to analyze & project sector growth for many years into the future and use the companies income statement, balance sheet & cash flow statements to help guide their decisions a lot of the time.
Then they hunt down the best companies in each sector & compare them to find the best growth or value plays.
It’s too much work for how slow the returns are (unless you don’t need quick money & just want to build your portfolio for 30+ years).
For day trades, I mainly just look at charts, volume, level 2 and time & sales & then quickly glance at the statements.
I never do any modeling to project for years ahead, it’s just silly for stocks under $5.
I ALSO NEVER BUY PENNY STOCKS, I ONLY SELL THEM.
Besides all of us real hardcore day traders know that most portfolio managers are not very chart savvy & make money slowly.
It takes forever for them to build your portfolio with stocks & other assets that have insane size floats (or just low volume) that never move (even with a big news catalyst).
This is good for them because their % gains are always standard & keep your money out of trouble a lot of the times.
The bad part is you won’t be balling out traveling & buying cool shit for your 300 follower Instagram account until you are 65 (if you even live that long.)
I myself, have to keep it simple & remember to know that most of the companies that I am going to be dealing with that are up %40 – %50 – %60 – %70+ for the day are likely to be short-term spikes to the upside off of pump & dump hype (big email list hype, news that is exaggerated, press releases that don’t matter/misinterpreted etc…
In reality, most of these companies never end up being successful.
SO… I have a little bit of a different approach, I only sell penny stocks, I never buy them anymore, DID I SAY THAT ALREADY? ARE YOU PAYING ATTENTION? IS THE EARTH FLAT?
My penny stock scanner is set up very simply:
Stock prices: $1-$5
Volume – 300k+ premarket then I turn it up to 1,000,000 volume AS SOON AS MARKET OPENS
% Gain – Up minimum 10%
My scanner looks like this (I am using Interactive Brokers but, this should be available on most platforms for you).
This allows me to hone into stocks that are up a ridiculous amount for literally no other reason than someone trying to pump the stock price higher.
The penny stock promoters can get rich while they fuck you out of your own money when they unload the shares at the peak high after everyone has bought up their shares.
They buy ridiculous amounts of shares before the stock ever moves, they pump it up through campaigns phone calling, emails etc…& then they dump it once everyone starts buying.
That’s most likely what happened with the stock in today’s video, but you can never be too sure.
This is the first blog post for penny stocks I have done & will continue to do them so make sure to subscribe to the email below to always be alerted when I make a video.
If you would like to get into investing, you can purchase a discounted membership & start learning the Forex market.
When you decide to become a student of mine, I also will include the new penny stock trading education at no additional cost when it is launched.
The new videos will be up within 3 weeks & most likely just 2 but I give myself time in-case of any errors.
In the meantime study my 19 hour 50+ video course & get my in depth trading analysis sent to you daily for the Forex market that has been trusted by BusinessInsider.com, TheStreet.com, Investing.com, Barchart.com & InsideFutures.com.
This is not licensed financial advice & by no means solicitation to buy or sell securities, please trade at your own risk.