Without the right penny stock trading resources, you might as well head to Vegas for a high stakes Keno playing weekend. You are practically guaranteed to go broke either way!
Trading OTC stocks comes with its risks, but it is certainly not a gamble for those that are educated and come to play with the right tools. Learning what types and how to use the different penny stock trading resources is NOT optional if you want to succeed!
There are plenty of free and paid resources at your disposal and you can be successful with either or both, but you have to know what they are and you need to use them.
Let's break this into two sections, one for free penny stock trading resources and the other will cover subscription based.
Side Note - There are some services that claim to have actual software that will pick daily winners for you..."Danger Will Robinson..."
To keep this brief (as the full explanation would take it's own page), be very careful assuming there is some sort of automatic, make money while you sleep, type of miracle pill software for picking penny stocks.
Learn to do it yourself and you can experiment with those later if you'd like, but I personally wouldn't pay for the service...'nuff said!
1) Your Online Broker
The most essential tools to familiarize yourself with are the software and penny stock trading resources offered by your broker. Most importantly get familiar with how to place buy and sell orders, pull up a basic chart with daily volume and if they offer Level II where to access that.
Nearly all online penny stock brokers should have help tabs to get you familiarized with their setup. Ameritrade will even get a specialist on the phone with you to walk you through theirs.
You don't have to go crazy and learn a bunch of complicated "studies" and charting patterns (we'll go over the important ones in a few lessons), just get the basic navigation and general functionality down.
2) OTC Markets
You have to familiarize yourself with the OTC Markets website!
Learn how to pull up a stocks profile by entering its 4 or 5 letter ticker symbol, how to drill down for more info on the company (i.e. share details, news, financials and tier).
For the most part, you will only use their website for specific company information and not so much for finding stocks, but feel free to browse around their website to find whatever else you might be able to learn about their penny stock trading resources.
3) Yahoo Finance
Finance.Yahoo.com has a great finance section that I use to find news that, for whatever reason, was not published on the OTC Markets website.
Similar to OTC Markets, you'll look up a stock by its ticker symbol. For either site, if you don't know the symbol you can enter all or part of the companies name and they'll try to find a match.
Other than a news source, past and present news, there is not much I use Yahoo Finance for.
The Securities Exchange Commission is the authority! When posters on message boards want to state something as fact (regarding things like filings and processes, etc.), but have no proof, check the SEC website...
There is nothing that will stop a liar in their tracks faster than the truth. Not to mention, although the SEC website is - zzzzzzz - boring, it will make you a better and more well rounded trader to know these things.
Investopedia.com is not geared towards penny stocks, but as you are continuing your education you will see them pop up number one in search engines for many "what is" types of questions you might have regarding stock terminology and different trading scenarios. Their definitions are much easier to understand than those from the SEC.
6) Secretary of State's Offices (SOS)
An excellent source of information to find the stuff that the scammers don't want you to know. Are they current with their state of incorporation, wh filing with them, what is the authorized share count and does it match OTC Markets?
You won't necessarily find lots of information about a company, but what you do find can really open your eyes and save you from making a big mistake.
You'll find where a company is incorporated on the "Company Profile" section of OTC Markets...The most common are NV or DE.
Simply type the state abbreviation and SOS, like this NV SOS, into a search engine and the appropriate state office should be number one. Once there, search for the company of interest by name.
7) Message Boards, Chat Rooms and Tweeting
If used properly, and much of the hype taken with a grain of salt, these can be excellent penny stock trading resources:
Minus "some" posters on "some" of the pay sites, you should assume that everyone has their own agenda on these sites and if they are talking bad about it they want the stock to go down, so they use scare tactics, because they are short, want to buy cheaper or are just a malicious person, etc.
It's very rare, VERY rare, anyone spends day after day, hours each day, slamming a stock just to be a "good guy," honestly wanting to warn others of the danger.
Same is true for pumpers...They want you to buy so the price goes up and they can sell. Profit is what this game is all about and for some people they don't care how they get it!
1) Level II
Level II is in my opinion one of the penny stock trading resources you have to have access to! If you sign up with Ameritrade, you get it free. With most any other brokers you'll typically have to have a certain amount of trades to get it free, you'll have to pay for it monthly or in the case of Scottrade (does not offer Level II for penny stocks), then you'll have to use a third party vendor.
If you do need to use a third party vendor, then iHub has the cheapest available, as low as $30 a month. That being said, if you subscribe to...
2) Equity Feed
EquityFeed.com has an amazing service and I personally feel they are one of the best penny stock trading resources around! With a monthly subscription you'll get Level II access, stock screener and a really cool (very profitable for me) news scanner. Minus other subscribers to Equity Feed, you'll get news faster than most all other traders...It hits the wires and most times they are the first to grab it and present it to you based on your parameters.
It's a bit pricey, but once your account grows and/or if you are planning to trade somewhat frequently, then this is a must have in my opinion.
3) Stock Charts
StockCharts.com not only gives you an amazingly good screener for penny stocks (based on chart setups), but also offers an excellent amount of training to help to transform you into a master chartist!
They have a free option and paid options with their cheapest plan costing around $15 a month. I would personally use the $25 plan, because I want the custom scans (these can make you money).
4) DD Amanda
DDAmanda.com offers a very simple and fast way to DD (due diligence...research) stocks. You'll enter the ticker symbol once and have quicklinks to many of the resources mentioned under the free section above. They also have custom scans that can find all kinds of profitable opportunities.
This an excellent tool, but subscriptions are limited and it can be a bit pricey for new traders. In the penny stock game time is literally money...When you can lead the herd vs. chase the herd you stand to be very profitable! DD Amanda saves time!
5) Promotion Stock Secrets (PSS)
PromotionStockSecrets.com claim to fame was spotting penny stock promotions before the promotion...this led to huge profit opportunities for their members just a few years ago when promotions meant 100-1000% gains in very short periods of time. They were certainly one of the top penny stock resources during the "BIG" promotion years.
Promotions have cooled off to some degree, but they still offer a great research service where you can request an in depth look at any ticker and their research specialist (who is very good) will give you an overview of the pros and cons of the company.
They also have an excellent chat room that discovers very profitable trades on a daily basis. Things move fast and the stocks they uncover on their chat board are probably best suited to play once you get a bit more experience. In addition, their service is not cheap at almost $200 a month for their top service.
There are many, many more resources available and this list could have gone on and on, but I wanted to focus more on some very well known penny stock trading resources and ones that I've used and/or currently use. Let's move on to the "infamous" Penny Stock Promoters.
Table of Contents
What is a Penny Stock
Risk vs Reward
Tools of the Trade
How to Find Stocks
How to Buy Stocks