You might’ve heard that most traders lose … so how can anyone be making money with penny stocks?
I can tell you it’s not easy. But I believe anyone can do it with the right mindset, dedication, discipline, and the right teacher.
I teach my students how to do it in my Trading Challenge. We stick to simple patterns and my trading rules.
In this post, I’ll share how my students and I are making money with penny stocks and give you some strategies to improve your chances of success* … Let’s go!
(*Please note: My results, as well as those of my students, are far from typical. Individual results will vary. Most traders lose money. I have the benefit of years of hard work, dedication, and experience. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)
Table of Contents
- 1 What Are Penny Stocks?
- 2 Making Money With Penny Stocks: Is It Possible?
- 3 How Do People Make Money Trading Penny Stocks?
- 4 Advantages of Trading Penny Stocks
- 5 Risks of Trading Penny Stocks
- 6 How to Find the Best Penny Stocks
- 7 3 Strategies to Increase Your Chances of Making Money With Penny Stocks
- 8 Top 5 Penny Stocks to Watch in 2020
- 9 Frequently Asked Questions About Making Money With Penny Stocks
- 10 Conclusion: Are Penny Stocks Profitable?
What Are Penny Stocks?
I get to work from virtually anywhere with only a laptop, solid Wi-Fi, brokers, and a trading platform.
Making money with penny stocks has given me the freedom to travel the world, meet amazing people, and the ability to help make the world a better place through charity.
And it’s all because I found this little niche called penny stocks. (For the full story of how I got started in penny stocks, get my no-cost book, “An American Hedge Fund”.)
Penny stocks are basically cheap stocks of small developmental companies. They trade for under $5 a share. They can trade on the major exchanges or the OTC Markets.
Now, let’s get into…
Making Money With Penny Stocks: Is It Possible?
Making money trading penny stocks is definitely possible. But it’s not for everyone … It takes a ton of hard work and dedication. If it was easy, everyone would do it.
Only a few people have the kind of dedication to start making money with penny stocks.
You need to focus on the process and your trading plan first.
Thinking about money brings up too many emotions. That can impact your decision making and lead to trading mistakes. You can’t be emotional in trades.
Trading is hard. That’s why I only have a few millionaire students and several six-figure students.* But I want more! I’m always looking for dedicated students for my Trading Challenge. Apply today if you’ve got what it takes.
How Do People Make Money Trading Penny Stocks?
Penny stock promoters pump up penny stocks with news, press releases, and emails to unsuspecting, uneducated ‘investors.’
Then the promoters and insiders dump their shares at a much lower price. And the uneducated investors get screwed and end up holding the bag.
Once you’re educated and recognize the patterns, you won’t fall victim to these scams. My students and I are making money with penny stocks by trading these predictable patterns.
You can take advantage of the upside momentum. Or you can short it when it starts to dump … and most do eventually. Or you can trade both directions like my student Tim Grittani did when he made $200,000 in one day.*
But always be careful with shorting. These stocks can go higher than you think. Be patient and wait for the trade to come to you.
Advantages of Trading Penny Stocks
There can be so many advantages to trading penny stocks. The first is their low price. It gives new traders a chance to get into the market with a small account. You can start with a few thousand dollars and potentially grow your account with small gains over time.
Another advantage of penny stocks is the lack of competition. There are no professionals, hedge funds, or algorithms trading penny stocks. You’re competing against the penny stock ‘investors’ who believe in the company and are buying and holding.
That’s why the patterns are repeatable, And that’s another advantage…
The patterns repeat, making it easier to learn and trade the patterns. If you’re prepared and study the past, you can learn to recognize and take advantage of the momentum as others buy into a company’s lies.
But in trading, there’s no such thing as a guaranteed win.
Risks of Trading Penny Stocks
Every kind of trading or investing is risky. And penny stocks are no different.
The major risk of trading penny stocks is losing money. If you’re trading and haven’t studied and prepared, you’re taking on extra risk. Never risk money you can’t afford to lose.
Penny stocks are especially risky because they’re shady companies. A stock can be halted if the U.S. Securities and Exchange Commission (SEC) suspects stock promotion or false news that’s misleading investors.
Stocks can be halted for weeks or months while there’s an investigation. And when they re-open it’s usually at a much lower price.
Penny stocks are also extremely volatile. They can have huge price swings up and down. A stock could spike straight up but suddenly reverse and head down. So be ready to get out quickly.
If you need help surviving this market volatility, get my “Volatility Survival Guide.” It’s a resource to help you navigate this crazy market, available to you free of charge.
How to Find the Best Penny Stocks
I have no secret tip for how to find the best penny stocks for day trading. I tell students and non-students everyday … watch the biggest percent gainers.
When I build a watchlist, I always start with big percent gainers.
You also need the best tools to find the best penny stocks and I have one that’s a game-changer … More on that it later…
Reading Stock Chart Patterns
Reading stock chart patterns and technical analysis skills are a must for day trading penny stocks.
With so many fancy indicators and moving averages, it can be hard to know which to use or how to use them.
For me, simple trading patterns work the best. I use support and resistance and candlestick charts. Other traders like to have all kinds of indicators and marks on their charts. For me, it creates too much noise.
3 Strategies to Increase Your Chances of Making Money With Penny Stocks
Let’s look at some simple strategies to trade penny stocks…
As a new trader, you need a few simple stock patterns to trade. All my top students started trading only one or two patterns.
Breakouts are the simplest pattern to recognize and trade. That’s when a stock breaks above a previous resistance point. This can be a high from a few days, weeks, or months prior. Or a stock could be making new yearly or all-time highs.
Breakouts are usually the beginning of an upward trend that can last a few days or longer.
Check out this post for how to identify and trade breakouts.
OTC First Green Day
OTC stocks are my favorite kind of stocks to trade. They have cleaner, more predictable chart patterns. Stocks listed on the major exchanges tend to have more choppy price movement.
An OTC first green day happens when a beaten-down stock has a catalyst that brings in volume. It creates a big green candle on the daily chart. If a first green day stock can close near its highs for the day, there’s a chance it could gap up the next day.
Check out this video for more on how to trade a first green day OTC…
Use the Right Tools
Before you go into the market battlefield, arm yourself with the best tools and weapons.
I think the best tool to find and trade penny stocks hands down is StocksToTrade. Full disclosure: I helped develop StocksToTrade and I’m a major investor.
But you can’t beat it. It’s specifically designed for penny stocks, by traders for traders.
This platform has it all in one place — a stock screener, built-in watchlists, and customizable charts. It also has Oracle, the AI technology that can help you trade ideas. And with broker integration, you can do everything in one place.
But its best feature is the new Breaking News Chat. It’s created countless trading opportunities for me this year (I’ll share an example soon). It’s a game-changer in notifying you as soon as penny stock news comes out.
Check out this video to see the benefits…
In prepping for market battle, you also need a teacher. It’s tough to go it alone. A mentor can help speed up your learning curve.
In my 20+ years in the market, I’ve learned a lot. You can save yourself a lot of frustration by learning from my mistakes.
But you’ll still gotta put in the work. It’s not easy, but my students and I are proof that making money with penny stocks is possible.*
Apply only if you’re ready to work your butt off. I don’t accept just anyone. I don’t have time to waste on people who don’t take their education seriously.
Top 5 Penny Stocks to Watch in 2020
Here I’ll share some recent OTC runners that I personally traded to show you that making money with penny stocks is possible.*
Want to know which stocks I’m watching every week? Sign up for my no-cost weekly stock watchlist. I won’t trade every stock, but I watch them for potential patterns.
Alaric Corporation (OTCPK: HALB)
Alaric Corporation is a venture capitalist firm. On October 13, it announced that Arizona State University discovered a COVID-19 antibody, using the corporation’s intellectually owned property.
The stock jumped 600% in one day after the news. News releases tied to the coronavirus have been the single biggest catalyst for stocks in 2020.
I traded this stock a few times during its run. But my best trade was an overnight hold on October 13. I sold into the gap up the next morning for a profit of $3,468.*
Check out the chart…
Inspyr Therapeutics, Inc. (OTCPK: NSPX)
Inspyr Therapeutics, Inc. (OTCPK: NSPX) is a biotech focused on therapeutic treatments for diseases. On October 13, it released news that it acquired technology for precision treatment of cancer. Preclinical data showed delayed tumor growth.
I dip-bought the stock when it came down a bit off its highs and sold into the bounce for a profit of $2,960.*
Luckin Coffee Inc. (OTCPK: LKNCY)
Luckin Coffee Inc. is based out of China and sells coffee, beverages, and light meals. Like Starbucks in the U.S. It’s a former runner and could offer more opportunities in the future.
On October 8, it had a perfect morning panic dip buy opportunity and I made $2,550 on the trade.*
DSG Global Inc. (OTCQB: DSGT)
I traded this stock about half a dozen times. But my best trades were on October 9 when the stock had a first green day OTC breakout. At first, it was a little weak. But I took another trade later in the day after it broke out.
Blonder Tongue Laboratories, Inc. (AMEX: BDR)
October 13, I was alerted to this trade thanks to the StocksToTrade Breaking News Chat. The company had patent news for its networking modules for display systems. I caught a nice little spike in the stock from the news and made $1,260*.
Frequently Asked Questions About Making Money With Penny Stocks
Is Day Trading Penny Stocks Profitable?
Yes, day trading penny stocks can be profitable. But all trading is inherently risky. Do your due diligence first. My students and I are examples of profitable penny stock traders. You won’t be right 100% of the time. Losses are part of the job. Manage your risk and always cut losses quickly.
How Much Money Can You Make Trading Penny Stocks?
How much you make trading penny stocks depends on you, your strategy, your risk tolerance, and what size positions you take. Trading isn’t like a job with a salary. What you make month to month can vary. So until you find consistency, trade small and safe.
What Are the Most Successful Penny Stocks in History
Some of the major companies you know today started out in penny stock territory. In 1997, Amazon.com Inc. (NASDAQ: AMZN) had its IPO at less than $2 per share. In the early 2000s, Apple Inc. (NASDAQ: AAPL) traded for under $1 per share. But these penny stock success stories are rare.
Conclusion: Are Penny Stocks Profitable?
Making money with penny stocks is possible. But remember, most traders lose. So why do some make millions and others lose their life savings?
There are a lot of variables in trading. It’s not an exact science. The stock market is like a moving target … Just when you think you have it figured out, it can change and humble you fast.
You must always be prepared. That means you have to study the past. You have to study chart patterns, and why stocks move. Learn how to recognize an opportunity and when you should cut your losses.
I help my students prepare for the battlefield of trading. I give them the tools and weapons to do battle against the competition, promoters, and pumpers.
You don’t have to struggle and make every mistake in the book to learn how to trade … Apply for my Trading Challenge and learn from my mistakes. That’s the benefit of having a mentor and teacher.
Do you think making money with penny stocks is possible? Let me know in the comments … I love to hear from you!