There are many who are looking for ways to make penny stock fortunes. However, most of these people will never learn to make money trading penny stocks. Some of them will lose quite a bit of money on can’t miss trades; others will become so confused that they walk away convinced that penny stock trading is a scam. There are a few that will learn the craft and those individuals will be glad that they did.

Which category do you want to be in? Would you like to know how to make your fortunes in penny stocks? If so then read on.

Well “fortunes” is probably an unfortunate term to use. Can you make a fortune in penny stocks? Sure some people will accomplish that task. If, however, you think that you are going to invest $5000 and turn it into $2,000,000 overnight then you are living in a dream world and you need to come back to reality. You can make money in penny stocks but your expectations need to be managed and you need to understand a few things.

The first thing that you need to understand is that penny stocks are risky. All stock trading is risky for that matter. If you don’t believe you can lose money when trading stocks then you should click out of this article and take a dose of reality. Not only can you lose money but you will lose money on trades. The key is to make more than you lose.

The most important thing that you can do is to develop a disciplined mindset and trading strategy. I am here to tell you that apart from discipline you will be a horrible penny stock trader. Stock trading is not something that you can do by the seat of your pants. It must be well thought out, you must have a trading plan and you must stick to that plan.

Ignore all of the penny stock newsletters that are out there. They will only serve to confuse you. On top of that most of them won’t make you money. Yes many of the stocks mentioned to make large moves but most of the time this is immediately after the announcement by the newsletter or penny stock picking service. Most of these newsletters are paid to pump up certain stocks or they are already holding positions in the stocks that they mention. When their subscribers pour into the stock and cause it to run up they quietly exit and take their profits. You are left holding the bag. The writer of the newsletter ends up with profit and many of their readers end up with losses. Be wary of this.

You don’t want to depend on someone else to make your trading decisions anyway. You want to be in charge. You can be in charge and be successful. You need to develop very specific criteria for what will cause you to enter a trade and what will make you exit a penny stock position. This needs to be very specific. If you develop a trading plan and then stick with it you will find success. However, if you do not stick with your plan then no matter how good the plan is you will most likely lose money. Discipline is essential if you ever hope to make your penny stock fortunes.

I would recommend that you make your trading decisions based on chart patterns. It is quite difficult to make decisions based on fundamental analysis when considering penny stocks. I have found that technical analysis is much more helpful. I would also not be long term holders of penny stocks. They tend to revert back to previous prices after good moves. Your goal is to make a profit. In order to do that in penny stock trading you will need to do exactly that: trade. You can use candlestick chart patterns to trade or you can use simple indicators such as moving averages. Virtually anything will work with a disciplined trading strategy and virtually everything will fail without one.

So before you begin on your quest for fortunes, learn about the mental side of the trading game and what are necessary components of a successful trading strategy. It will be well worth your time.

The most ideal way for you to begin trading penny stocks is to open a online discount brokerage account. It only makes sense. A full service brokerage house is going to charge you more (in many cases a lot more) for your stock trades. They charge you more because you have a dedicated broker who is there to help you work your account. This broker is supposed to help guide you through the pitfalls of investing and to use his/her expertise to make you money. A full service broker is there to make recommendations to you. However, they are not going to recommend buying penny stock. Those recommendations are going to have to come from you. Since this is the case I see no point in paying extra commission for a service that they will not be providing. If you feel that your full service broker offers other value that you don’t want to miss out on then by all means use them but I wouldn’t use them. I used to be a broker with one of the countries largest full service firms. In fact, they were number two at the time behind Merrill Lynch. We would never have been allowed to recommend penny stocks to our clients for fear of customer complaints and the fear of losing an arbitration hearing should the customer complain.

I believe that online penny stock trading is where it is at. Open an online discount brokerage account with a reputable firm. You can use Ameritrade, Scott Trade, Fidelity, etc. It is not necessarily important who you use since most of them will offer similar services. Deposit your money into the account and then begin penny stocks trading. You will make your own decisions.

I know that some of you are uncomfortable right now with making your own decisions. However, this is extremely important. You don’t want to spend time and money for someone else’s penny stock recommendations. You can never be sure why they are recommending the stock. However, when you adopt your own penny stock trading strategy you will know the specific reason why you chose to enter or exit each and every trade. You do not want to be dependent on other people for your trading decisions. You can successfully make your own trading choices.

So now that you know where to buy penny stocks get an account opened up, deposit your money and continue to hunt around this website to find the information that you need to make you a successful penny stock trader.

Too many beginning traders believe that successful trading is only about picking the right stocks. This couldn’t be farther from the truth. The number one thing that will contribute to your success a penny stock trader is whether or not you have put in place a disciplined trading strategy.

I have always had a knack for picking the right penny stock. Unfortunately, in the beginning I did not have a trading strategy in place. This more often than not led me to either enter a stock too early (thereby accruing losses) or to exit a trade at the wrong time (either giving back profits or not fully realizing even greater profits).

This may sound like heresy but I am of the belief that any trading system can be successful. All systems will work if the trader exercises discipline. By discipline I am referring to both a system of managing the money in your account and a system of when to enter and exit trades. If you are trading by gut feel then most of the time yu will doom yourself to failure.

A disciplined trading system helps you overcome the two biggest obstacles that stand in the way of you becoming an expert trader. Those two obstacles are fear and greed. Both of these poisonous emotions will cause you to enter and exit your traders at the wrong time. They can turn the best penny stock advice into a losing trade. These emotions will cause you to act irrationally. They can only be conquered through strict adherence to a trading system.

I have heard many people suggest paper trading for awhile before committing any real money. Although I am not entirely against paper trading I remain unconvinced of its benefit. In trading, you don’t experience fear and greed until you lay your money on the line. When you do everything changes. The best traders are able to treat each trade objectively. They do not fall in love with their trades. Their system enables them to overcome fear and greed.

So do you want some great penny stock advice? Here it is. Before you ever commit one cent to a trade spend some time and develop a trading system or at least adopt someone else’s trading system. And once you have that trading system in place, stick to it at all costs. That is the best penny stock advice that I can give you.

However, the question of whether to buy penny stocks (or to sell penny stocks for that matter) is really one for an active trader. Penny stocks don’t present you with the greatest of fundamentals so of necessity they are more trading vehicles. Make your profit and get out and visit them sometime again in the future when they look attractive for a short term gain.

I am going to make a case to buy penny stocks. There are many reasons that cause me to come to this conclusion, however, for the sake of brevity I would like to focus on just three. Let’s dive in.

Penny stocks are volatile. If you are a trader you know that you need stocks to trade that are volatile. It will not do you much good to spend your time trying to trade some $50 company that moves in a range of 15 cents each day. Stability may be great for long term holds but it won’t help you out if you are a trader. Why are penny stocks so volatile? Simply because the slightest news can be something very beneficial or negative for the company. Most penny stocks are in a make or break mode. You can use this in your favor.

Penny stocks are cheap. Cheap penny stocks help the active trader in the sense that he/she can buy many shares of a company rather than a few hundred. Let’s look at a little example. If you were to buy 200 shares of a $50 stock, it would cost you $10,000. This same $10,000 could be used to buy 5000 shares of a $2 stock. Now if each company would move 20 cents you would make $40 on the higher priced stock and you would make $1000 on the penny stock. That is not a bad chunk of money. That is the power of penny stocks.

The final reason is that penny stocks can make large swings in very short period of time. This is due in part to their volatility. The swings that penny stocks can make are massive on a percentage gain basis. It is quite common for penny stocks to move 10% in a given day. That is something that you cannot get out of higher priced stocks. In other words, penny stocks give you great bang for your buck. So if you are contemplating where or not to buy penny stocks I would suggest that you give them a try. Just learn to be a disciplined investor. You can find other articles on this website that will give you pointers on how to do this.

Penny stock day trading can still be done because penny stocks still retain the volatility necessary to make it work. Day trading cannot be done in the absence of volatility. Therefore penny stocks are the perfect stocks for this type of trading. Penny stocks are able to make pretty big swings each and every day. It is not uncommon for them to swing 5% – 10% each day. It is also quite possible for them to swing as much as 20% – 50%. There are also penny stocks that have made more than 100% percent gains in a day.

The difficult thing when penny stock day trading is obviously picking the spot to enter the stock during the trading day. Often, the moves in penny stock trading occur at the beginning of the trading day. If you are intent on day trading then I would look for stocks that open up big or down big and then look for some sort of reversal bar or some indication that the stock may continue.

Either way you need to keep your stops close and be willing to take quick profits. I would not look for anything greater than 5% for the most part. You will on occasion make larger percentage profits but always looking for these profits may end up costing you money in the long run.

If the stock opens up or down big often there is a pullback or a rally in response to the initial move. This may provide you an entry point if the stock is going to continue to move in the initial direction of the open. If you enter the trade and it moves beyond the open I would probably place some sore of mental stop at the open. If it fails to hold this level there is a good chance for a reversal. I would then look to enter the trade in the other direction.

Penny stock day trading is difficult to do correctly. I believe it is much safer to do penny stock swing trading. But if you are intent on this type of trading then hopefully these ideas will be of help to you.

Other sites aren’t necessarily paid to pump penny stocks but they have a large readership with a newsletter. They stake positions in penny stock and then they put out an alert to their newsletter readers. A large number of people buy blindly and the owner of the newsletter takes profit and his readers are left holding the bag as the stock sinks back to where it came from since the buying frenzy is over.

If you want to be successful in penny stock trading then you need to learn how to trade penny stocks. You need to have a penny stock trading strategy and learn about entry and exit strategies. If this is not something that you are familiar with then you can learn about penny stock trading at the Penny Stock Digest. The site is not complete but the information there is quality and free. Check it out. At some point the site will be complete and it will serve as a manual on penny stock trading, one that you would expect to pay quite a bit of money for.

The profit potential in penny stock trading is enormous but don’t go around chasing penny stocks to watch. Learn how to trade penny stocks and you will have a skill that can be used to make money rather than depending on someone else. Who knows maybe someone will come to you in the future looking for hot penny stocks.

However this produces opportunities for oil companies since they can now go out and drill with the price of gas at these levels. Lower prices of oil do not make it cost effective to drill. There are a number of penny stocks in the oil industry that could take advantage of the current landscape.

Oil penny stocks have potential explosive earning potential should some of their wells produce like they hope. Below is a list of some of the Independent Oil Companies that are also penny stocks. As always do your due diligence and look for trading opportunities.

Tip #1

Always trade stocks with good volume. This is especially true in the penny stock trading world. Since most penny stock traders trade thousands of shares it is important to trade in stocks that have a high enough daily volume to be able to absorb you moving in or out of a position. In thinly traded stocks you could move the stock price by up to 5% against you if you had to get out. Low volume will work against you.

Tip #2

Don’t follow too many penny stocks. One of the mistakes of traders is that their attention is too divided. You do not need to follow 50 or 100 or 200 stocks to be successful in penny stock investing. In fact I would say failure is proportionate to the amount of stocks you are trying to follow. I would recommend putting together a watch list of 10 or 20 companies and look at their charts every day. If you try to track too many stocks you will miss big moves when they occur. Following a smaller watch list allows you to get to know your stocks. You are aware of earnings dates and some fundamentals. You begin to get a feel for its trading pattern.

Tip #3

Don’t be too diversified. The point of trading penny stocks is to be able to take advantage of the large swings. If you are too diversified (i.e. holding too many positions) you will water down your profit potential. I would recommend not holding more than 3 or 4 positions. Does this create more risk? Of course it does. But you need to manage risk by your trading rules and not through diversification.

Tip #4

Have specific trading rules in place. As I mentioned earlier no one will succeed in penny stock investing apart from a disciplined set of trading rules. Before you begin trading you need to have a defined set of entry strategies and exit strategies. then you must stick to them like glue. These rules are your lifeline in trading. Without them you will go under.

So where do penny stock investments fall in the order of safety? No one is trying to be deceptive. Penny stock investments can be risky. However, if you are going to trade in penny stocks then you need to realize that they are not long term holds. I would never recommend buying a penny stock and holding it for five years. The fundamentals of these stocks are so poor that it is difficult to even make an informed decision about the prospects of the company. I would have no idea where they would be in five years. But I may be able to predict their near term trading pattern over the next two weeks.

Penny stock investments are really not investments at all; they are trading vehicles. The point in trade penny stocks is to move in and out of them to take advantage of the large swings that they often present us with.

If you put in place a very disciplined and strict trading program you can limit much of the risk involved in penny stock trading. If you narrow down the stocks that you will trade to those that provide you the best liquidity and near term visibility of price movement you will go a long way to limiting your risk. Trade penny stocks who have had recent good news or who have already reported earnings. This way there is less of a likelihood of a downside surprise.

Once you have narrowed your trading list down then you need to trade on the basis of some very defined entry strategies and exit strategies. Know why you will get into a stock and why you will get out. I do not recommend that you ever make those decisions based on fundamental analysis. You are a trader and should make your trading decisions on the basis of technical analysis.

Determine what triggers will get you into a position and which trading signals will get you out. The same principles of technical analysis apply to all stocks regardless of their price. Become a student of technical analysis and apply what you learn to your trading of penny stock investments.

It is humorous that many in the investment community consider themselves successful of they return in the neighborhood of 10% on their account each year.  Why is this humorous?  Because a 10% gain is a good day for some penny stocks, not a year.  Penny stock gains can easily run in the neighborhood of 10%, 20% or even 50% in a day.  A five percent move is just an average run of the mill move.  Why is this the case?  It is because penny stocks have such a low cost per share.

Penny stocks usually refer to any stock trading under $5 per share.  Since they are priced so low every move in the stock is magnified.  A 20 cent move in a $20 stock is only a 1% move, however, the same move in a $2 stock is a 10% move.  Ten thousand dollars invested in the $20 stock would leave you with $10,100 where the same money invested in the penny stock would give you $11,000.  If you think that this is a large move, think again.  In the world of penny stock trading, penny stock gains of 10% are small.  Let’s take a look at a couple of examples.

Dendreon (DNDN) is a biotech stock.  On March 9, 2009 DNDN was trading at $2.64.   On April 27, 2009 it closed the day at $21.55.  That is more than a 900% return in 1 1/2 months.  This is the power of penny stock gains.  Today the stock trades over $33 per share.  This is what can happen when there is great news on a biotech penny stock.

Human Genome Sciences (HGSI) is also a biotech stock.  On March 11, 2009 it closed at .48 cents per share.  On July 28, 2009 it closed at $14.63.  Today it closed at more than $30.  That is more than a 6300% return in less than one year.  To give you better understanding $10,000 invested in HGSI nearly one year ago would have produced $625,000 today.  So when I say that penny stock gains can be staggering, this should give credence to it.  You may want to consider doing some penny stock trading of your own.