You’ve probably heard of GameStop’s massive short squeeze in early 2021. The meme stock movement started when small-time traders on Reddit’s r/WallStreetBets collaborated to take on Wall Street. And they won.
Even though the Reddit mob gets less mainstream attention now they’re still there, plotting their next big move.
Are meme and penny stocks volatile? Yes. Can they be profitable? Absolutely. The trick to trading these stocks is to have them on your watchlist first. That way you can be prepared when they make their move.
Read on to learn more about the ins and outs of trading penny stocks, plus get access to my list of trending penny stocks on Reddit!
Table of Contents
- 1 What Are Penny Stocks?
- 2 How to Research Penny Stocks
- 3 Benefits of Trading Penny Stocks
- 4 Risks of Trading Penny Stocks
- 5 What to Look for Before Trading
- 6 9 Trending Penny Stocks on Reddit 2022
- 6.1 1. Meta Materials Inc. Preferred Shares (OTCPK: MMTLP) — The Short Squeeze
- 6.2 2. LATAM Airlines Group S.A. (OTCPK: LTMAY) — The Completely Irrational Spiker
- 6.3 3. Cann American Corp. (OTCPK: CNNA) — The Sub-Penny Stock Pump
- 6.4 4. Fast Radius Inc. (OTCPK: FSRD) — The Bankrupt Penny Stock
- 6.5 5. Creatd, Inc. (OTCQB: CRTD) — The Exchange Agnostic Penny Stock
- 6.6 6. AMC Entertainment Holdings Inc. (NYSE: AMC) — The Fallen Meme Penny Stock
- 6.7 7. Wialan Technologies (OTCPK: WLAN) — The Sub-Penny Internet Stock
- 6.8 8. Cloudweb Inc. (OTCPK: CLOW) — The Breakout Penny Stock
- 6.9 9. TPT Global Tech (OTCPK: TPTW) — The Sub-Penny Breakout Stock
- 7 How to Trade Penny Stocks
- 8 Are Penny Stocks Worth It?
- 9 Can Penny Stocks Make You Money in 2022?
- 10 Learn How to Make the Right Penny Stock Picks
- 11 Key Takeaways
What Are Penny Stocks?
Penny stocks are stocks that trade at $5 per share or less. All of them are cheap, and most of them are sketchy and unstable. I like them for one big reason — the gains from penny stocks can build your trading account quickly.
If you’re coming from the world of “real” stocks, the same tactics don’t apply. You’ll need strategies tailor-made for penny stocks.
How to Research Penny Stocks
I don’t use fundamental analysis on penny stocks because their tradeability isn’t based on fundamentals. To get a good feel for these cheap stocks, you have to watch, watch, watch — actively keep an eye on how they move, and learn the patterns to really understand how the stock behaves.
Learn From History
Stock history is like poetry – it doesn’t repeat, but it often rhymes. Similarly, stocks are sort of like athletes, with their own ways of playing and a track record you can learn from. This means you can take a look at past performance to make educated guesses on how the stock will perform in the future.
A good way to find high-potential penny stocks is to use a platform like StocksToTrade and create watchlists of former big runners. Study their patterns, and spot which ones are poised to make another big run.
Analyze the Chart
Technical analysis entails identifying trends and patterns in a penny stock’s movement. It’s a more useful way of evaluating penny stocks than fundamental analysis — the beauty of penny stocks is their volatility, as the market tries to figure out what these sketchy companies are worth.
There’s really no secret to being a good technical analyst except practice — studying charts, getting in screen time, watching and trading stocks. Pattern recognition skills, which are essential in technical analysis, come from experience.
Benefits of Trading Penny Stocks
While cheap, penny stocks are often sketchy or, sometimes, even outright scams. So, why should you even consider trading penny stocks? Here are some pluses of trading penny stocks…
Small Accounts Grow Quicker
Penny stocks might be cheap, but the gains add up. Trading penny stocks can build your account faster than trading pricier stocks. If you know what to do, you can grow your account size in a matter of weeks or even days.
Less Interference From Big Accounts
Wall Street doesn’t like penny stocks. They think penny stocks are sketchy, so major hedge funds and investment firms don’t really dabble into them – this means supply and demand are relatively predictable.
With large-cap stocks like Apple, a big investor or hedge fund manager could theoretically unload their shares and completely tank the price. With penny stocks, you’re much less likely to encounter something like that.
However, that doesn’t mean penny stock trading is risk-free. There are still many scams and unscrupulous people trying to make a buck at your expense, so be careful.
Prices Move Slower
Major traders often overlook penny stocks due to their sketchiness, so prices tend to move slower. This often leads to multi-day runs, which means you have more time to get in on a move.
Risks of Trading Penny Stocks
Penny stocks aren’t all sunshine and rainbows. There’s always a risk when trading stocks — and there’s definitely a risk when trading penny stocks.
Here are three things to watch out for when trading penny stocks:
99% of Penny Stocks Fail
Penny stocks are low-cost but high-risk. Most companies selling penny stocks ultimately fail — and when they fail, they fail fast. The key to mitigating this risk is having a solid trading plan and not getting greedy.
Penny Stocks Are Volatile
Penny stocks are volatile and often have low liquidity. This is a bad combo that makes them harder to unload when you’re experiencing losses.
On the other hand, you can turn this risk into reward if you’re disciplined. One of my favorite penny stock patterns is the panic dip buy. I’ll wait for a stock to panic, then enter a position when it starts its recovery. Many times this leads to a quick bounce — when it doesn’t I cut my losses quickly.
They’re Fraught With Fraud
The penny stock market is a playground for scam artists and market manipulators. The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) try to keep the scams in check, but it’s like trying to put out a fire on the surface of the sun.
Most news or social media posts about penny stock companies are created by people trying to pump the stock up. Never believe the hype, and do your due diligence before trading any penny stock.
What to Look for Before Trading
What kind of stocks make it onto my watchlists? Many are low float stocks — stocks whose publicly tradable shares total less than 10 million. Since their supply is so limited, changes in demand can cause big price swings.
Former runners also make it on my watchlists. These stocks have made runs before, so I know big moves are possible under the right conditions.
I learn the charts of my watchlist stocks well, how they react to shifts in volume and recent news. This gives me a better idea of the trades I’m looking to make — if I make any at all.
This is important: I’m only watching these stocks. I won’t trade them unless they fit my preferred setups. Measure twice, cut once.
The best traders watch more than they trade. That’s what I’m trying to model here. Pay attention to the work that goes in, not the picks that come out.
9 Trending Penny Stocks on Reddit 2022
The top trending penny stocks on Reddit that I’m watching for the rest of 2022 are:
- (OTCPK: MMTLP) — Meta Materials Inc. Preferred Shares — The Short Squeeze Penny Stock
- (OTCPK: LTMAY) — LATAM Airlines Group S.A. — The Completely Irrational Penny Stock Spiker
- (OTCPK: CNNA) — Cann American Corp. — The Sub-Penny Stock Pump
- (OTCPK: FSRD) — Fast Radius Inc. — The Bankrupt Penny Stock
- (OTCQB: CRTD) — Creatd, Inc. — The Exchange Agnostic Penny Stock
- (NYSE: AMC) — AMC Entertainment Holdings Inc. — The Fallen Meme Penny Stock
- (OTCPK: WLAN) — Wialan Technologies — The Sub-Penny Internet Stock
- (OTCPK: CLOW) — Cloudweb Inc. — The Breakout Penny Stock
- (OTCPK: TPTW) — TPT Global Tech — The Sub-Penny Breakout Stock
My first Reddit penny stock pick is Meta Materials Inc. Preferred Shares (OTCPK: MMTLP).
Why was MMTLP one of my top watches throughout all October and November? Take a look at that wicked multi-month uptrend.
Where did all that support come from? That’s where Reddit comes in. This is one of the most heavily promoted plays I’ve seen in a long time. That’s awesome if you know how to trade it.
I’ve mainly traded intraday panics. I have confidence in the dip buy pattern, knowing that the promoters that have been hyping it up won’t let it fail.
If anything, they’re getting even more shrill as the spin-off date for the company the ticker represents approaches. MMTLP stock will be good for shares in Meta Materials’ (NASDAQ: MMAT) wholly-owned oil-and-gas subsidiary, Next Bridge Hydrocarbons. The company isn’t worth the stock price. But these lunatics think it can go even higher.
Here’s a sample from the r/MMAT subreddit: “Lack of supply plus insane pressure equals a ‘Name our price’ situation.”
PLEASE don’t believe the hype. Trade safely, and watch out for the December 14 spin-off date. Have a plan to take profits — and an exit strategy if your risk breaks!
2. LATAM Airlines Group S.A. (OTCPK: LTMAY) — The Completely Irrational Spiker
My second Reddit penny stock pick is LATAM Airlines Group S.A. (OTCPK: LTMAY).
Don’t be fooled into thinking LTMAY is a real stock — even though LATAM is the biggest airline in South America, and trades on its home exchange at an Air Canada-equivalent $5 billion.
The crappy penny stock that trades in the U.S. is out of step with LATAM’s stock price on its home exchange — by about 10,000%!
That’s because LATAM recently flooded the market with 589 BILLION new shares. That’s a dilution of 99.9%.
With the deluge of new shares, this puts LATAM’s implied market cap higher than $300 billion. Unfortunately for penny stock “investors,” LATAM’s management doesn’t see it this way.
This is what they said in a recent press release: “The market should slowly absorb the information summarized above and the trading prices should progressively adjust as they reasonably align in all markets.”
So why is this stock on my watchlist? LTMAY is up more than 700% since early October.
Like most penny stocks, this one will eventually fail. I’m enjoying the ride while it lasts.
3. Cann American Corp. (OTCPK: CNNA) — The Sub-Penny Stock Pump
My third Reddit penny stock pick is Cann American Corp. (OTCPK: CNNA).
If you look at this company’s former name — Canamed4Pets, Inc. — you’ll get a sense of what they’re about. After a recent acquisition run, they’re now in the video game and defense sectors too.
Like a lot of shady penny stock companies, they’ll take part in any sector that can pump their stock price. If they can talk about “synergies” between their video game and cannabis delivery business lines, all the better.
After a few months in sub-penny land, this stock came back into play on rumors of a reverse merger. That’s when I traded it for a nearly 38% profit …
CNNA is now making noise about doing IPOs for its subsidiaries. With CNNA fresh in traders’ minds, news like that could move the stock again.
4. Fast Radius Inc. (OTCPK: FSRD) — The Bankrupt Penny Stock
My fourth Reddit penny stock pick is Fast Radius Inc. (OTCPK: FSRD).
This digital supply chain penny stock just entered Chapter 11 bankruptcy proceedings. It’s all the way to the right of this progression:
Remember this chart well, its the basis for my 7-step framework, @30DayBoot & @completepenny & you must study not to fall prey to greed/ignorance or you'll get wrecked like 90% of traders. It's VITAL to sell into excessive strength/hype, do not just hold & hope like most newbies pic.twitter.com/QsAGHsI6lp
Why am I watching it? Don’t look at the 99% fade this stock has been on since it went public in February 2022. Instead, look at the spikes it’s had in November.
It’s had two 100% spikes in this post-bankruptcy period. Its promoters are still making noise.
The r/FSRD subreddit only has 27 members. So what if they’re all promoters, and have made 36 posts talking about how great FSRD is?
I’m more interested in the Palantir Technologies Inc. (NYSE: PLTR) subreddit, with its 45,000 members. PLTR is a major investor in FSRD — and FSRD is worth $9 million in annual revenue to the struggling defense software giant.
FSRD is up for a potential sale or reorganization in December. I’ll be watching to see what happens as the December 12 bid deadline approaches.
5. Creatd, Inc. (OTCQB: CRTD) — The Exchange Agnostic Penny Stock
My fifth Reddit penny stock pick is Creatd, Inc. (OTCQB: CRTD).
What is CRTD doing? By the time the year is out, it might be on its fourth exchange. If that’s not enough, one of those exchanges is an NFT exchange.
Why is this happening? CRTD is playing three-card monte, except with four cards. Don’t try to follow the ace, go for small gains where you see the opportunity.
Of course, this stock stacked some big gains in the past couple months. It went on a 4,000% run from mid-October to mid-November!
Reddit traders drove some of this momentum, claiming that CRTD was the victim of the same “short attackers” that had targeted Global Tech Industries Group Inc. (OTCPK: GTII) and FingerMotion Inc. (NASDAQ: FNGR) in September and October. That gets me listening — I made $4,852 trading GTII during that run!
CRTD has lost almost 60% of its value since mid-November. But remember: former runners can run again.
6. AMC Entertainment Holdings Inc. (NYSE: AMC) — The Fallen Meme Penny Stock
My sixth Reddit penny stock pick is AMC Entertainment Holdings Inc. (NYSE: AMC). At the time of this writing it’s around $7, but earlier in November it almost fell back into penny stock territory.
That’s quite a fall for a stock that was once crowned the next GameStop.
It’s been a while since I’ve traded AMC. But one of my top former students, Jack Kellogg, is still taking bites of that apple.
But he’s one of the best breakout traders I know. He thinks AMC is still in play. If he’s watching this stock, shouldn’t you be?
7. Wialan Technologies (OTCPK: WLAN) — The Sub-Penny Internet Stock
My seventh Reddit penny stock pick is Wialan Technologies (OTCPK: WLAN).
This sketchy little company had an awesome breakout in late October to mid-November, posting over 500% gains in that time.
The catalyst was the hiring of a consultant who used to work for T-Mobile. He brought a patent with him that WLAN is supposedly starting work on, for embedding wireless devices in street lights to improve internet connectivity.
It sounds like a good technology — but if it were really that earth-shaking, why would a company like T-Mobile let it go?
This one is just about the chart. I’m watching WLAN to see if it has another move in it.
8. Cloudweb Inc. (OTCPK: CLOW) — The Breakout Penny Stock
My eighth Reddit penny stock pick is Cloudweb Inc. (OTCPK: CLOW).
This is another stock that Jack traded recently.
Please retweet/congratulate @Jackaroo_Trades who had a BIG six-figure trading day today on $TQQQ $CLOW $SQQQ to surpass $11 million in total trading profits, see ALL his trades: https://t.co/EzikHbwQ07 as ALL my top https://t.co/occ8wKmT5U students turned masters show ALL TRADES! pic.twitter.com/4O46rb87Tp
CLOW showed a nice stair stepper pattern up as it gained more than 500% through November…
CLOW is still hitting new highs. I’ll be watching when it panics.
9. TPT Global Tech (OTCPK: TPTW) — The Sub-Penny Breakout Stock
My ninth Reddit penny stock pick is TPT Global Tech (OTCPK:TPTW).
TPTW was another 500% runner in November. The catalyst for this run was evidently the new “green smart city” projects the technology company is taking on.
I’m not too surprised either — this company has claimed to be involved in telecom, medical technology, and media content too. According to its Reddit boosters, it has several multi-million-dollar projects in the pipeline — not bad for a company with a market cap under $3 million!
That’s all to say, don’t trust this stock as far as you can throw it. But there are plays to be made.
How to Trade Penny Stocks
Trading penny stocks is a high-risk, high-reward proposition. You might make money, but a lot more traders lose money.
Here’s my advice if you want to trade penny stocks:
Study Hard, Especially When You’re New
If you’re just starting as a trader, you need to build your knowledge account first. To do that, you need screen time and trade time. Start small and build your trading skills over time.
Maintain a Penny Stocks Watchlist
A watchlist helps you keep track of stocks you frequently trade or would like to trade. I make watchlists of former runners that might make more runs in the future, so I can get in on the run as soon as it happens.
I gave you a list of penny stocks to watch in this article, but don’t copy them blindly. Learn why I picked them and choose your own stocks to watch.
Use a Stock Screener
A powerful stock screener is absolutely essential — it’s your eyes in the trading battlefield. A trader-first platform like StocksToTrade will help you keep track of breakout plays and sudden volume spikes.
Full disclosure, I developed and invested in StocksToTrade — I love it because it’s tailor-made to how I trade. It’s the first trading platform I’ve encountered that has everything I need in one place, from incredible add-ons like the Breaking News Chat to intuitive, flexible charting.
Learn the Patterns
Pattern recognition is essential in identifying which stocks to trade. This only comes with experience, so keep analyzing charts. Eventually you’ll get a sixth sense for how the stocks you’re watching respond to volume, what market makers pop up in their Level II quotes, how their price action works.
Remember — it’s not about memorizing patterns. A good trader understands why the patterns happen and adapts their strategies to fit the circumstances.
Find Trading Setups That Work for You
If you’re new, you probably don’t know which trading setups work for you. There’s only one cure for that — try a bunch out! These are my favorites:
- Morning panic dip buys
- Buying first green days
- Shorting first red days
This isn’t rocket science. Most of my top students and I have two or three patterns that we use again and again. That’s how we’ve gotten better at trading, and built our trading strategies.
Make a Trading Plan
A trading plan represents who you are as a trader and includes your trading style, preferred category of penny stocks, risk tolerance, account size, and many other factors. It helps you focus and keeps you from buying random stocks that don’t fit your objectives and goals.
A solid trading plan helps you reduce risk by setting a defined loss. Once you’ve hit your loss, you need to exit the trade.
Win or lose, I call it a successful trade if you build, execute, and follow your trading plan.
Aim for Small Gains and Cut Losses Quickly
Don’t hold and hope when dealing with penny stocks. I know it’s tempting to hold onto a stock and wait for it to reach even higher prices, but the chances of it happening to a penny stock are pretty slim. Instead, secure the small wins and cut losses as quickly as possible.
Daily reminder that you do NOT have to just hold & hope like shady promoters say. It's tragic each time I get messages from those duped into holding promoted plays like $CYN $STRN $MRAI $TIVC $CEI & newbies literally think risking losses of 30-50-70% is part of the game. WAKE UP!
Record Every Trade and Learn From Them
Every trade is a learning experience. Keep a log of ALL the trades you made and review them regularly. Identify what worked, what can be improved, and what needs to be avoided.
Are Penny Stocks Worth It?
I think penny stock trading is the best way to build small accounts quickly. That said, it’s also a surefire way to lose money if you don’t know what you’re doing.
Can Penny Stocks Make You Money in 2022?
Penny stocks can make you money in 2022 — especially now that OTC stocks are starting to run again. Check how GTII and MMTLP performed over the past few months for proof.
Learn How to Make the Right Penny Stock Picks
Now that you’ve learned the top tips for trading penny stocks, it’s time to learn how to pick them yourself. If you want access to my daily watchlist and so much more, I recommend joining my Trading Challenge.
I’ll share what I learned the hard way. I had no one to show me the ropes. If you promise to study hard, I’ll help you become a self-sufficient, safe, and smart trader — and avoid some of the bumps on the way.
This isn’t a get-rich-quick class. I don’t accept everyone — I want people who work hard and appreciate what I teach. It’s up to you to develop your own trading strategies, but you’ll do so with the support of my top former students and a raft of current ones — all of them working together to get the best out of the trading lifestyle.
Here’s what you get:
- Interactive webinars with me and my top students
- Over 7,000 video lessons
- Entry to my incredible community chat room
- Access to my 30-Day Bootcamp, my DVD collection, and much more!
Reddit communities like r/WallStreetBets have the power to pool people together and make penny stocks into real stocks, like we’ve seen with GameStop. I’m not telling you to trade every Reddit meme stock out there, but they’re definitely worth keeping an eye on.
The thing that matters most is having a trading plan and discipline. Do your research, and don’t follow the hype. That’s the way you get the good out of trading without taking the bad.
Do you have any Reddit stock picks? Let me know in the comments!