Penny Stocks: 5 Steps To Picking A Winner

Today’s 80-minute video below I answer 30 FAQs/explain all about what makes my trading challenge so special and what exactly is this tool I use every day and why it’s so useful. Please pay attention, as I’m tired of answering these same questions all the time!



I’ll get that video transcribed shortly, since I know how important it is to even my valued deaf students and what I’m about to say next might sound surprising, but stay with me.

The fact is, there’s a good reason why a lot of traders look down on penny stocks. Actually, there are several good reasons. Among them: penny stocks are risky, the market is volatile and there are a lot of shady stock promoters looking to pump and dump. Oh, and let’s not forget: the companies themselves are not always the best.

Download a PDF version of this post.

To tell you the truth, I’m not going to argue any of these points. The thing is, these reasons to avoid the penny stock market are completely valid. The market is volatile. Penny stocks are not for the faint of heart. However, once you begin to learn about penny stocks and how they work, you can devise a system for success. That’s exactly what I did and I’ve now turned $12,415 into $4,500,000+ including plenty of losses along the way.**

So yes, there’s plenty of risk, but there can also be plenty of payoff with penny stocks.

OK, I’ll level with you: there is no way to get it right all of the time with penny stocks. However, by taking certain proactive measures and following these steps, you are far more likely to pick winners when trading penny stocks. Save this guide and refer to it whenever you need a reminder.

1. Learn how penny stocks work. This seems painfully obvious, right? But you’d be amazed by how many people think that just because penny stocks are traded in such small amounts per share, that they don’t need to learn the rules of the stock market before they start trading. This is a common beginner mistake and, for many, it’s the first and fatal mistake that ends their trading career before it begins.

To learn how to pick winning penny stocks, you have to start at the beginning. Learn how penny stocks work. Read my e-guide, which will give you a great primer on the basics of penny stocking. If you’re ready to get serious about trading, consider joining my Millionaire Challenge, where I go into a lot of detail and specifics about the ins and outs of trading penny stocks.


2. Think pre-spike. Traditionally, the format goes like so: stock traders look to buy low and sell high. Makes sense, right? But as my students know, you can maximize profits even further by buying low, selling high and then selling short when prices begin to fall. When you work this way, it’s possible to make profits both as the price rises and falls.

However, there’s a catch: you need to identify stocks before they spike. In this way, thinking “pre-spike” can help you choose the most effective and lucrative penny stocks. It can help double your money making potential.

This post details my secret formula for discerning whether or not a stock has spiked or not, with helpful tips that can be applied immediately in your trading.

3. Learn the patterns. Like I said in the video earlier, there is no way that you can be right all the time about penny stocks. But, over my time as a trader, I have identified a number of patterns that can prime you for penny stock success….patterns like this and this and this.

I go into MUCH greater detail in my Millionaire Challenge program.  But, in a nutshell, you can look to the market for specific clues: looking for stocks that have already begun to spike, looking for breakouts that are reaching new heights and taking a long, hard look at the price action.

By learning these patterns and understanding what they mean, you can help yourself choose the best penny stocks possible.


4. Do your research. It’s a cold, hard truth: many penny stock traders don’t succeed because they simply don’t do their research. One of the lessons I drum into my students from the beginning of their studies is that doing your research is a vital step that cannot be skipped.

It can be easy to feel like you’re not taking action or “doing” anything while researching stocks. But that couldn’t be further from the truth. If all you’re doing is depending on the word of others, then your profits can automatically be cut, because you’re just being a lemming. Rather than following the trend, seek to be ahead of the curve. This can help you begin to make profits.

Time and time again, a relatively short amount of time spent on research yields profits, both for me and my students.

When a stock seems to hold promise, don’t just depend on the word of promoters, who have their own agendas and have probably “clued in” countless other traders. Do your own digging. Research the stock’s filing and disclosures and see what’s going on in SEC news. See what is going on with the company and what they have in the works; make sure it is legit.

Often, simply doing your research can assist you in making bigger profits and leaving your competitors in the dust. It makes you an influencer, not a follower.

5. Be prepared. Success calls for hard work. It requires determination. You need to do your research and you need to be methodical. But you also need to be prepared.

In chess, the most successful players are thinking several moves ahead: they have a long-term strategy and plan. This is exactly what you need as a trader. Penny stock traders who are just chasing the profits but aren’t prepared are probably going to bankrupt their portfolios.

While doing your research and being methodical might not be sexy, the money that you can make certainly is exciting.

But I’m not selling a get rich quick solution here; that would be insincere and it probably wouldn’t work. While it is possible to make money quickly, the mentality that you need to have is long term. Proper planning isn’t fun but it is necessary.



I said it at the beginning of this post and I will say it again. Picking a winner every time is simply not possible, in penny stocks, in horse racing, or in any sector of life. However, there are steps that you can take to help ensure success. Follow the tips in this post and it will help you choose more winners over time.

Do you have any favorite tips for choosing a winning penny stock?

Posted in Basics

Millionaire Challenge

I Turned $12,415 into $4,838,000 Trading Penny Stocks**. Now it’s your turn to learn from me.

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Timothy Sykes

Hey Everyone,

As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

Which is why I've launched my millionaire challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

So when you get a chance make sure you check it out.

PS: Don't forget to check out my free Penny Stock Guide, it will teach you everything you need to know about trading. :)

  1. chris

    I like think of it as Im a detective stalking a play, looking at all the details looking for the set up. Then Once the set up is there with best odds my focus turns to executing entry and exit , Methodical in the study precise in the trade!

  2. King Ramza

    I have seen the success in preparation. My last several trades were successful with the only problem being my nervousness. Lol. Today I had the perfect dip buy that I planned prior to market open, but then got nervous. I still made $100, but I got out wayyyyy too early. Especially because it was earlier than I had planned on paper. So tonight I am preparing mentally and knowledgeably. Not to trade sloppy but to at least grab what I planned for. Penny stocks definitely have risk, but I’ve only been doing it for a month and I have learned so much through your Dvd’s and Pennystocking silve, and last but not least Stocks to Trade. See you in the a.m. Mr. Sykes.

  3. Alejandro Alvarez

    Awesome post Tim !! Now going to watch today’s video lesson for the second time in the day. That’s how I make sure I get everything from it.

  4. SpaceBoundT

    Including college, this is by far the most valuable “course” that you will ever have learned IF you are willing to put in the work. It can also become the most rewarding. The live webinars and video lessons are spot-on and extremely detailed. I love how everything is time-stamped including trades, chatroom posts, etc. so you know where you were and where you are heading. With the training, I have learned to adapt while in a trade and pivot in order to follow the chart pattern to protect myself from taking a big loss, but more importantly turn the potential loss into a profit. Once I become more skilled, I plan to ride the chart patterns like a wave. This is still new to me and I love how he said the video that the best investment is the investment in yourself!

  5. Anonymous

    Haters and slackers need not apply .. Hardest work you will ever do, but also the most rewarding if you do things right .. At first you may stumble, but eventually the light bulb is replaced with a flood light and all struggle is worth it .. Let there be LIGHT!

  6. marion arledge

    well done and well said. i am very pleased to say i have found the perfect outline to gain success.

  7. Sean S

    I literally spent thousands of dollars during my late teens, 20’s, and early 30’s paying for stock trading courses and paying for “hot stock picks” before I discovered Tim Sykes and I was such a little Lemming. Guess what, my entire portfolio got completely wiped out and there was only one time I actually made a tiny profit. Tim has been the only teacher that I know who actually teaches how to become a Bette trader step by step with transparency. Tim, I would love to see you write a book explaining the process on how you sit every night to create your watch lists. I am currently deep into your trader checklist videos, and the knowledge you provide on how to read and understand charts is absolutely phenomenal. So happy you have created a truly transparent platform such as penny stocking silver for the average joe that wants to become more than average with his/her trading skills. I’ve already learned 1000 times more in just a few months than any other money I wasted away elsewhere from so called trading and finance gurus. Thanks!

  8. Test

    Having read this I believed it was rather enlightening. I appreciate
    you finding the time and effort to put this information together.
    I once again find myself spending a lot of time both reading and leaving comments.
    But so what, it was still worthwhile!

  9. Ivan Cupido

    thank you Tim definetly ago for me on this on. Study study and research is my plan to the future.

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