I want to discuss a simple strategy to trade Penny Stocks. This is very easy and trades off of broader economic data. In order to use this you must get a list of Penny Stocks To Watch. The best way to make your list is by getting a few stocks in a particular sector. The main thing you are seeking to find is companies that are legit. When I say this I am saying to try and stay away from pumped stocks or Penny Stocks Priced under $1.00. This will steer you clear from fraud and you can avoid being part of a scam.
In the United States of America, a penny stock, also known as a micro cap equity, refers to a share in a company which trades for less than $5.00. While this is the official definition, and is used by the US Securities and Exchange Commission, generally every full service or discount broker, and the vast majority of analysts and institutional investors, there are other more loosely held criteria applied by the general public and most retail investors. In other countries the term may be used differently, without reference to US institutions.
Now that we know what a penny stock is lets talk about how to trade them. Penny Stocks make horrible investments but traders stand to make huge gains from them.. but how? Well it is very simple. You want to trade penny stocks that are above $1.00 and have big volume. You can type Bloomber Economic Calender in Google to get the economic data that comes out on any given day. For example if the housing starts are being reported then you know you can have BZH and HOV on your radar to trade based on the report. If the numbers are good then you know to watch both of those to see which one gets a lift. Then trade the one that appears it will move the most. If oil inventory reports come out while oil is up, a storm is in the gulf, or increased demand is expected, and the reports see a drop in supply then you know you can go long KOG or MILL. This is an easy strategy to trade the news. You do want to make sure you keep whisper numbers close by. Sometimes it does not matter what the news is even if it is good, if the street expected better that is considered bad news. You can get the expectations on bloomberg at no charge also.
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