I’ve got a list of the top penny stocks for day trading for you…
A lot of new traders get excited when they read things like that. Are you one of them?
I get it. A lot of new traders are just looking for hot stock picks to trade. But my goal is to educate traders to think for themselves. Imagine never needing to ever follow someone else’s trades again…
Your goal should be to find your own stocks to trade. And learn how to trade them consistently.
Don’t be scared. It’s an exciting journey, and I’m here to help. It’s why I became a teacher. Don’t fall into the trap of following others. That just leads to frustration…
So read on to learn how to find the top penny stocks for day trading and how I trade them…
Table of Contents
- 1 What Are Penny Stocks?
- 2 Can I Day Trade Penny Stocks?
- 3 Why Are Penny Stocks Good for Day Trading?
- 4 Penny Stock Day Trader vs. Penny Stock Investor
- 5 Why I Day Trade Penny Stocks
- 6 3 Top Tips to Find Good Penny Stocks for Day Trading
- 7 Top Penny Stocks to Watch in 2020
- 8 Top Penny Stocks Under 10 Cents
- 9 Conclusion: Top Penny Stocks for Day Trading
What Are Penny Stocks?
If you’re new to penny stocks, start with my FREE penny stock guide.
Penny stocks are an amazing little niche of stocks that trade for less than $5 per share. They’re listed on the OTC Markets or the major exchanges, like the Nasdaq and New York Stock Exchange (NYSE).
Pretty much all of Wall Street hates penny stocks. Professional traders, hedge funds, and algorithms don’t trade them.
That’s either because they think they’re trash companies, (and they’re not wrong) or they think the potential gains are too small. Meanwhile, my top students and I understand that small gains add up.
Can I Day Trade Penny Stocks?
Yep, you can absolutely day trade penny stocks. A lot of professional traders try to say that day trading and shorting penny stocks is illegal. But they’re wrong. I’ve been doing it for years.
A day trade is when you buy and sell a security on the same day. If you hold a position overnight, it doesn’t count as a day trade.
If you have less than $25,000 in your brokerage account, the pattern day trader rule (PDT) can limit your day trades to three per week. Learn more about the PDT here.
You can still trade penny stocks with a small account. A lot of my students started with less than $25,000 and have grown their accounts to six-figures or more.* I think limiting your trades can actually make you a better trader. It forces you to avoid overtrading and focus on the best setups for your strategy.
(*Please note: My results, along with the results of my top students, are far from typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication. Trading is inherently risky. Do your due diligence and never risk more than you can afford to lose.)
Why Are Penny Stocks Good for Day Trading?
I think penny stocks are great for day trading because there’s less competition. Like I said earlier, hedge funds, professionals, and algorithms don’t bother with this niche.
For me, that means I’m competing against a lot of uneducated traders. Too many traders believe the promoters who pump up a stock’s product or technology.
They buy and hold forever thinking they bought the next Microsoft Corporation (NASDAQ: MSFT) or that their stock will be as big as The Walt Disney Company (NYSE: DIS) … They usually end up disappointed. I’ve seen it in one hot sector after another.
Penny stocks are also cheap. And I don’t mean cheap as in a good deal. I mean they’re low priced.
This means you can start day trading penny stocks with a small account. You can buy enough shares to make a profit in a short amount of time. You don’t have to wait a few years for a stock to move a few dollars per share.
That’s because penny stocks are volatile. Volatility means big moves in a short amount of time. If a penny stock company releases positive news, a lot of people buy in on the hype. A big spike in volume with news can really drive prices up, as you’ll see in my examples shortly…
My goal is to get in and out quickly, take a small piece of the move, and move on to the next trade. It’s how I’ve made over $6 million in trading profits.*
Penny Stock Day Trader vs. Penny Stock Investor
Let me be clear: I’m a penny stock day trader, not an investor. I once invested in one of these junk companies and got burned.
The funny thing is, I was right about the technology (print-at-home tickets for events). But I lost half a million of my own money because of the shady company management.
That’s why I never recommend anyone invest in penny stocks. I trade these stocks for the quick upside move, then move on. My goal is to make 10% or more per trade, not 10% per year like long-term investors.
Why I Day Trade Penny Stocks
I trade penny stocks because there’s little competition. And these stocks can make big price moves on hype and volatility, and the same predictable patterns repeat again and again. It’s not always exactly the same, but learning the patterns can help you find momentum.
Once you know the patterns and how other traders think, you can learn to take advantage of this niche. But you need to start with your education.
Don’t believe the hype of the penny stock promoters. Learn how to take advantage of the moves they create when uneducated “investors” buy in on the hype.
For my most comprehensive trading DVDs, get “How to Make Millions.” I start with the basics of trading terminology and go all the way into stock catalysts, patterns, and what I look for in a trade. All proceeds from this DVD go to charity.
3 Top Tips to Find Good Penny Stocks for Day Trading
So, how do I find the top penny stocks to day trade? I live for transparency. Here are my top tips…
Use a Stock Screener
Use a stock screener to find the biggest percent gainers every day. That’s how I find penny stocks for day trading. There’s no big secret here. It blows my mind that I have to say this so often … I scan for big percent gainers on StocksToTrade every day.
I’m proud to say I helped design this platform and I’m a major investor. It’s designed for the penny stocks I love to trade.
Find out which stocks I’m watching every week. Subscribe to my penny stock watchlist here.
Watch for Breaking News
Throughout the day keep your eye on breaking news so you can catch stock moves early.
With penny stocks, there’s a lot of informational inefficiencies. Stock spikes can be delayed since most people who trade these stocks don’t pay attention to the news all day. They don’t hear about it until everyone starts talking about it.
But you can get the news that can move stocks fast with…
Is it obvious yet that StocksToTrade is my all-time favorite trading platform? I think it has the best charting tools, built-in watchlists, and customizable scans and settings.
Its new Breaking News Chat alerts members to breaking news relevant to penny stocks. And with broker integration, you can do everything from one place.
OK, I might be a bit biased because I helped design it. But that’s what makes it so great. It was designed by traders for traders, specifically for day trading penny stocks. Get your 14-day trial for only $7.
Top Penny Stocks to Watch in 2020
A lot of ‘gurus’ offer stock picks hoping that uneducated traders and investors will blindly follow and push the stock price higher. But you never hear from some of them after their buy alert. Did they sell? Where are they selling? What was their goal for the trade?
When I started teaching how to trade, I did it to shine a light on this industry. So I share watchlists and posts like this to help educate traders. I want you to be a self-sufficient trader. And I share as much as possible to help you learn the process.
Instead of giving you a bunch of random stocks to watch here, I’ll give you a list of stocks I actually traded. You can see my entries, exits, and trade commentary. Penny stocks move fast. So even if I gave you a list of hot stocks, they’d be out of play too fast.
Here are a few examples to help you start to learn my process for picking and trading stocks…
SPI Energy Co. Ltd. (NASDAQ: SPI)
On September 23, SPI Energy Co. Ltd., (NASDAQ: SPI) was running on news that it was entering the electric vehicle (EV) sector with an EV subsidiary.
As you can see from the chart, I sold way too soon. That’s OK. Singles add up!
Sunworks, Inc. (NASDAQ: SUNW)
Here’s another play from September 23 … Sunworks, Inc. (NASDAQ: SUNW) was a sympathy play to SPI. Both are solar energy companies.
I made a profit of $4,320 on my trade, taking 18,000 shares from $1.09 to $1.33.* As usual, I didn’t chase. I waited for a dip after the spike to enter. I took a single and didn’t get too greedy.
The stock went up to a high of $4.57 and then to the $8s the next day. That’s the potential of penny stocks. A short squeeze can result in a massive move.
Now that both of these stocks have had huge moves, traders will pay attention. I tell my students to watch former runners. They can provide more opportunities for traders as long as there’s volume.
Digital Alley, Inc. (NASDAQ: DGLY)
Digital Alley, Inc. produces video cameras and recording devices for use in law enforcement. DGLY stock has run in the past when there have been riots or police brutality in the news.
I bought this as a potential play on news about protests and civil unrest. When I spotted the price action, I bought 22,000 shares at $1.92 and sold at $2.06 for a profit of $3,080*.
In my Trading Challenge, I teach my trading strategy in depth.
I have several millionaire students and even more six-figure students, and I’m ready for more.*
Do you have what it takes? Are you serious about learning how to take advantage of these moves without falling for promotions and hype? If you’re ready to take your education to the next level, apply for my Trading Challenge.
Top Penny Stocks Under 10 Cents
There have also been some good low priced plays this year. The market over the last six months has been amazing for day traders. Here are few examples of my trades on stocks under 10 cents…
DSG Global Inc.(OTCQB: DSGT)
On September 22, I bought 67,000 shares at $0.055 after the company released some positive business news. I noticed a wall of sellers on Level 2 at the $0.06 area, so I sold at $0.056 for a profit of $268.*
Halberd Corp. (OTCPK: HALB)
I bought this stock on September 21. It was spiking on positive coronavirus news. I dip-bought 685,000 shares at $0.0125. I was hoping it could go back to its earlier highs. It couldn’t quite get there so I sold at $0.014 for a profit of $1,028.*
Mass Megawatts Wind Power, Inc. (OTCPK: MMMW)
I traded Mass Megawatts Wind Power, Inc. (OTCPK: MMMW) on September 24 as a low-priced sympathy play to SUNW and the whole EV sector.
I got a partial execution of 74,285 shares at $0.017 on the morning spike. I sold at $0.021 for a $297 profit.* The overall market was tanking and the EV sector was losing momentum, so I sold and took the single.
Conclusion: Top Penny Stocks for Day Trading
Penny stocks are low-priced stocks that can trade on OTC markets or the major exchanges. There’s less competition in this niche, and I think it’s a great way to grow a small trading account.
Penny stocks run on news catalysts, hype, promotions, and earnings. They can have big spikes in a short time due to their volatility. So I’ve learned to enter and exit trades quickly, aim for singles, and cut losses quickly when a stock goes against me.
You can find all my trading rules here.
You can see all my trades on Profit.ly. Use my trades to learn and build your knowledge account. When you’re a self-sufficient trader, you don’t have to follow anyone else’s trades or alerts.
What are your favorite penny stocks for day trading? Let me know in the comments … I love to hear from you!