Best penny stock to day trade
An Overview Penny stocks are those stocks which are trading at a very low value in the market. What attracts traders to them is the sudden and huge upward move which they show at times.
In fact, most times, there are no fundamental reasons for penny stocks to give such huge movement. There are traders and investors who buy penny stocks just because they are cheap as compared to big socks and that itself is the biggest mistake committed by them. Penny stocks lack liquidity and very less outstanding shares are available for traders to buy.
So, it may happen that you wish to sell them off when they are falling heavily; but no one wants to buy them because of the fear of the stock crashing to even lower levels. So, one must be extremely careful while dealing in penny stocks and trade with less amounts to avoid losses.
Having said this, penny stocks are capable of doubling or tripling your investments within a year if you invest at the right stock and at the right levels.
Now, let us know how to identify the best penny stocks for day trading. Identifying Stocks for Day Trading Recent Movements For investing in penny stocks, it is important that you track the recent movements in these.
See whether the stock is in an uptrend, continuous uptrend or a downtrend. Try to relate the company's financial performance with its stock price to get a clear idea of what the future stock price would be. Choose a Safer Sector For day trading penny stocks, you should choose a relatively safer sector which is not affected much by fluctuations in the market. Stocks of such sector would be safer bets than the one which is in news constantly. Investor sentiment for different sectors can be different at different time of the year and hence you need to study it carefully to know stocks of which sector are in demand.
Avoid Over Valued Penny Stocks The best penny stocks to buy would be those which are fairly valued as compared to their peers. Valuations are always a matter of concern in the case of penny stocks because these stocks react very sharply to any kind of news. So, finding out their fair value with the help of valuation ratios such as price to earnings ratio or net profit ratio would be a good idea.
Sell on Up Moves A common suggestion for all those adventurous traders indulging in day trading stocks would be to book profits at higher levels in these stocks. You would naturally want to earn money when you are getting a better valuations and this can happen only when you exit all your positions. So, be attentive and develop your reflexes such that you do not miss a single profit booking opportunity. Day trading penny stocks can be done only with systematic stop losses and good stock research.
You can also take help from processional traders and brokers in this regard. So, give it a try if your pocket allows you and reap the benefits. This article is just for reference purposes and does not recommend any stock market transactions. Day Trading for a Living. Less often it is created in response to a reversal at the end of a downward trend. Whenever they do occur, ascending triangles are bullish patterns when the small black candlestick is followed by a big white candlestick that totally engulfs the previous candlestick.
Although often a bearish pattern, the descending triangle is a continuation of a downtrend. Less frequently it can be observed as a reversal during an upward trend. Just a quick glance at the chart and you can gauge how this pattern got its name.
Usually, the right-hand side of the chart shows low trading volume which can last for a significant length of time. Straightforward to spot, the shape comes to life as both trendlines converge.
They come together at the peaks and troughs. The lines create a clear barrier. If the price breaks through you know to anticipate a sudden price movement. Rather than using everyone you find, get excellent at a few. The patterns above and strategies below can be applied to everything from small and microcap stocks to Microsoft and Tesla stocks. If you like candlestick trading strategies you should like this twist. A candlestick chart tells you four numbers, open, close, high and low.
But you use information from the previous candles to create your Heikin-Ashi chart. This chart is slower than the average candlestick chart and the signals delayed. This is part of its popularity as it comes in handy when volatile price action strikes.
The strategy also employs the use of momentum indicators. A simple stochastic oscillator with settings 14,7,3 should do the trick. If you see that two candles, either bearish or bullish have fully completed on your daily chart, then you know the pattern is valid.
These charts, patterns and strategies may all prove useful when buying and selling traditional stocks. However, they may also come in handy if you are interested in the less well-known form of stock trading discussed below. Every day thousands of people turn on their computers in the hope of day trading penny stocks online for a living.
But what exactly are they? To help you decide whether day trading on penny stocks is for you, consider the benefits and drawbacks listed below. Unfortunately, many of the day trading penny stocks advertising videos fail to point out a number of potential pitfalls:.
Perhaps then, focussing on traditional stocks would be a more prudent investment decision. However, there are some individuals out there generating profits from penny stocks. So, if you do want to join this minority club, you will need to make sure you know what a good penny stock looks like. On top of that, when it comes to penny stocks for dummies, knowing where to look can also give you a head start.
For example, the metals and mining sectors are well-known for the high numbers of companies trading in pennies. Overall, penny stocks are possibly not suitable for active day traders. However, if you are keen to explore further, there are a number of day trading penny stocks books and training videos available. From above you should now have a plan of when you will trade and what you will trade. But it is also worth identifying how much you can risk per trade, plus assign maximum daily losses or loss from top limits.
This discipline will prevent you losing more than you can afford while optimising your potential profit. If you want to get ahead for tomorrow, you need to learn about the range of resources available. It is particularly important for beginners to utilise the tools below:. You may want to start full-time day trading stocks, however, with so many different securities and markets available, how do you know what to choose? Do you want to start day trading gold stocks, bank stocks, low priced stocks, or perhaps Hong Kong stocks?
This is where a stock picking service can prove useful. But what precisely does it do and how exactly can it help? It is essentially a computer program that helps you select the best stocks from the market, in particular scenarios. It can then help in the following ways:. Overall, such software can be useful if used correctly.
It can swiftly create a stock watch list, allowing you to focus your time on crafting a strategy. So, how does it work? Funded with virtual money, you can do the choosing of stocks, so you can practice buying and selling your favorite Apple or Biotech stocks, for example. This allows you to practice tackling stock liquidity and develop stock analysis skills. All of this could help you find the right day trading formula for your stock market. Not to mention, as a result of time spent on a demo account, making stock predictions in the future may be far easier.
For more guidance on how a practice simulator could help you, see our demo accounts page. Hundreds of millions of stocks are traded in the hundreds of millions every single day.
This makes the stock market an exciting and action-packed place to be. There are several user-friendly screeners to watch day trading stocks on and to help you identify which ones to buy.
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