Warning: If you learn how to buy penny stocks, you may become rich, famous and be the envy of your neighborhood...That's a lot to live up to, but quite frankly, I think you're ready! Let's put it all together and crush the market!!!
If you're ready for the fame, fortune and the success that may follow, then pay close attention, because we're going to find some penny stocks to buy that should make you and me some hefty profits!
I'm going to mention this again, but say it in a different way: Winning in the OTC and learning how to buy penny stocks on their market is all about base hits and doubles. If you are always swinging for home runs, then you're going to have to prepare to strike out...A Lot!
In other words, Don't Get Greedy! Take profits often and don't marry any of the stocks you buy...
I know the big 3,000%'ers are exciting and everyone gets visions of paying off their mortgage with one trade, but those types of setups only come around every so often and require a longer time frame (typically anyway) to hold. Longer hold times also increase the risks.
What we are going to cover below is for 20-50% consistent short term gains. Of course, you can make more, but each setup is different. Trust me there will be plenty more information we'll be releasing on how to buy penny stocks using different strategies.
First off, let me say that there are hundreds of different strategies for buying and trading penny stocks. What I want to cover here are three time tested and consistently profitable ones that will churn out those 20-50% winners on a regular basis for you.
The great things about these strategies is that they don't require expensive subscriptions (although Level II access is strongly recommended) and there is some, but not a whole lot of technical knowledge needed.
Using only the OTC Markets (current market, advancers section) and iHub (hot, breakout boards section) websites you can find some exceptional opportunities. The key is to be patient and buy on pullbacks.
Be patient and buy on pullbacks! Do NOT chase the price and know the average daily volume.
Future News Strategy
This is one of my favorite ways to buy penny stocks and has proven to be extremely profitable. Oftentimes companies will issue a press release or an 8k stating their intent to do something in the future.
For instance, SKYF recently announced (5/20/2015) that they were coming back to life and would be filing to get their stock current with the OTC and would be rolling out a business plan that included them entering into the MJ sector. Here's the chart:
You'll notice on that news that the share price raced to .0009, but dipped the next day to .0004. Had you been impatient and bought at the high of day, then you'd have been down over 50% in one day...That hurts! And, if this play never develops you're unlikely to ever see .0009 again.
It is important to note that with OTC stocks the news often doesn't come and selling into any strength (other traders buying in anticipation) is a very solid strategy.
As of this writing this is actually one of our profiled stocks and we took a small position at .0005 and a larger one at .0004. If it dips lower, then we'll buy more.
The goal here is to trade the action that will either precede the news for a smaller, safer gain of let's say 50% or to hold for the news (assuming no massive run before it hits, if there was a run before it hit we would sell some if not all into any strength) where we are expecting a minimum of a 500% return.
When you buy penny stocks with the future news strategy you need to keep in mind it typically takes 15-45 days for the trade to play out. If it drags on past 60, then you may want to plan an exit strategy as the news may never come.
In Play Now Strategy (MoMo Plays)
These are the faster and shorter term plays that are on fire right now. Big news broke already, a rumor has spread, maybe a stock promoter is pumping it or whatever...something lit the fuse and firecracker has popped!
Again, buy the pullbacks. These pullbacks can be based on a daily or intraday chart. It is also EXTREMELY important that you do not buy in to any hype being spread on message boards!
For instance, GNPT looks like it is off to the races and tomorrow it's on its way to a major breakout:
If you listened to the hype on the message boards that day you would have thought this was going to fly to .10 (sometimes they do, but more often they don't), but in reality here's what happened the next day:
You must put your emotions and most importantly your greed in check when you buy penny stocks. 20-50% a week with the occasional 300+%'er will make you a very wealthy person, but you can't expect every stock to be a triple digit winner.
I guarantee you will never go broke consistently taking 20-50% profits! Greed on the other hand,
will crush you!!!
I know, I know, I'm like a broken record...buy pullbacks and take profits often, but it's true and will make you a lot of money!
Going back to that chart, I'm a buyer at .0037 and .0034, but I'm a thief at .003 for some very quick 35-40% gains!
Gap Fill Strategy
When a stock opens the day with a higher price than it closed the previous day it creates a gap on the charts. On the OTC nearly all of these gaps will fill at some time or another. I'd say this will happen more than 95% of the time.
I'm not sure if this is a psychology thing with traders or if the big players using computer algorithms make it so, but it is nearly certain all gaps will fill.
Here is an example of ADMD (which is up on what many believe is pending FDA approval news) and how to buy penny stocks when the gap fills:
I am quite confident that this gap is going to fill fairly soon...If FDA news hits and it is positive before that gap fills, then I'll change my position on this (FDA approval for a .0045 stock is HUGE news), but like most penny stocks this should fill soon.
When I say the gap will fill I'm basically just saying that the stock will pullback to that range, no matter how briefly, which will "fill" it and satisfy whomever it is that does not like gaps on charts.
What this means to you is that buying in the gap range (the pullback) is in most cases, especially true for ADMD, a great idea for a nice bounce play.
On the flip side however, if bad FDA news comes out, then not only will the gap fill, but the stock is going to bottom out, so you are playing these more from a technical standpoint and you'll want to keep an eye out for seriously negative events that cause the entire stock to breakdown.
These gap plays are typically short term, 1-3 days, from the time you buy the gap and to when you'll look to sell. If you buy the gap and the stock continues down on heavy volume, then it's time to plan your exit and take as small a loss as possible.
Also, these typically work best when the gap is filled fairly soon after the gap was created. This is because there is still momentum with the stock and the bounce back up happens faster, oftentimes that same day.
We prefer to have as much information about a stock as we can before we risk our money, so there are a few other things we like to look at before our hard earned money gets into the game.
Without risking analysis paralysis (time is of the essence with certain plays), we like to see:
I wanted to go more in depth here with different strategies for buying penny stocks, but quite frankly there are so many strategies and so many different setups that it would cause this page to run on from here to China, but before we go...
A couple of final tips on how to buy penny stocks that you must, MUST burn into your brain...
Please make your way around the site as you'll find tons of additional information on how to buy penny stocks and much more, like possible stock plays.
We will profile stocks regularly that we find with the good, the bad, the ugly and the hugely profitable strategies on how to buy and sell them. None of this costs you a dime and we are not paid promoters like many of the sites you'll find out there.
I would say good luck to you, but if you take the time to study how to buy penny stocks on this site or others (hopefully a lot from this site:) and ask questions, then there is no need for luck...it's all skill baby!
for Dummies Guide
How to Buy Penny Stocks
Table of Contents
What is a Penny Stock
Risk vs Reward
Tools of the Trade
How to Find Stocks
How to Buy Stocks