timothy sykes logo

Penny Stocks-Timothy Sykes Millionaire Challenge

Day Trading Penny Stocks: The Top Penny Stocks for Day Trading

Timothy SykesAvatar
Written by Timothy Sykes
Updated 9/16/2023 21 min read

I’ve got a list of the top penny stocks for day trading for you, also the best top penny stocks 2023 tips you will find online…

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…

What Are Penny Stocks?

© Millionaire Media, LLC

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 over-the-counter OTC Markets or the major stock market exchanges, like the Nasdaq and New York Stock Exchange (NYSE).

While the definition of penny stocks is broad, it’s crucial to understand their intricacies before diving into trading. They are typically low-priced, volatile, and traded on over-the-counter markets or major exchanges. However, their potential for high returns makes them an attractive option for many traders.

If you’re new to this realm, start by understanding the basics of penny stocks. This will provide you with a solid foundation to build your trading strategies upon.

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 day trading strategies.

How to Identify Stocks for Day Trading

One of your first day trading tasks is identifying the right stocks. There are strategies and analysis tools that can help you spot potential winners.

Two things to look for: volatility and liquidity. 

Volatility because price swings can lead to profits; liquidity because it allows you to enter and exit a stock at a good price.

One of the most critical aspects of day trading is understanding the basics of trading itself. If you’re just starting out, consider learning the day trading basics to get a better grasp of the market dynamics. This will equip you with the necessary tools to navigate the volatile world of day trading.

Why Are Penny Stocks Good for Day Trading?

© Millionaire Media, LLC

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 $7.4 million in trading profits.

Pros and Cons of Penny Stocks

Penny stock trading, like most strategies, isn’t all good or bad. Let’s break down the pros and cons of these under-$5 stocks.

Pros:

  • Potential for Massive Gains: One of the key attractions of penny stocks is the possibility of making large returns. A small price change can equal a huge percentage gain.
  • Small Initial Investment: Penny stocks, by their nature, don’t require a massive bankroll to get started. That makes them accessible to almost anyone.
  • Volatility Equals Opportunity: The price swings in penny stocks might be dizzying, but they can provide opportunities for profits if you’re on the right side of the trade.
  • Pattern Predictability: These stocks often exhibit predictable patterns. The key is learning how to spot and exploit recurring candlestick chart patterns for gain.

Cons:

  • Low Liquidity: Many penny stocks lack the trading volume of bigger stocks, which can make them hard to buy or sell at the desired price.
  • Limited Access: Some brokers place restrictions on trading penny stocks, making it difficult for many traders to trade them.
  • High Risk of Scams: Unfortunately, penny stocks are sometimes used for pump-and-dump schemes and other forms of market manipulation. Always do your due diligence before trading.

Top Penny Stocks 2023: Penny Stock Day Trader vs. Penny Stock Investor

© Millionaire Media, LLC

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.

Read about it in my book “An American Hedge Fund.” You can get your no-cost copy here.

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.

One of the keys is to identify potential winners before they spike. This requires a deep understanding of market trends, company fundamentals, and trading strategies. One effective approach is to have a formula for finding promising penny stocks before they spike. If you’re interested in learning such a strategy, consider reading how I find penny stocks pre-spike. This could give you an edge in your trading journey.

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

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

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

This is actually one of the best top penny stocks tips…

Once you find big percent gainers on StocksToTrade, check for a news catalyst that can drive up the price. If you don’t find news, it could be a promotion, a pump, or a sympathy play.

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…

StocksToTrade

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.

Step-by-Step Beginner’s Guide to Trading Penny Stocks

© Millionaire Media, LLC

Here’s a quick-start guide…

  • Step 1: Educate yourself. Read articles, take courses, and learn the basics of investing.
  • Step 2: Find a reputable broker that allows penny stock trading. Invest in screening and charting products like StocksToTrade.
  • Step 3: Start researching. Look for businesses with solid fundamentals.
  • Step 4: Develop a strategy. Swing trading? Momentum trading? Decide what works best for you.
  • Step 5: Begin with a small amount of capital and be prepared to lose it — that’s the nature of the game. Build trading plans with reasonable goals and stop-losses. Track your results, and tinker until you reach profitability.

Risk Money and Honest Guides

Let’s be clear — trading, especially penny stocks, carries risks. Only use money you can afford to lose. And when it comes to learning, seek out honest guides who’ll give you the facts, not some overhyped idea of quick riches.

Start by Paper Trading

For newbies to the game, starting with paper trading can be a great way to practice strategies without risking real money. Test your strategies, refine them, and learn from your mistakes before you dive into the real thing.

Decide Which Types of Companies You Will Focus On

Are you into tech companies? Healthcare? Manufacturing? Deciding on a sector can help you focus your research and become an expert in that area.

Your Passion

If you’re going to spend hours researching and analyzing companies, it’s a good idea to choose a sector you’re passionate about. That way, the research feels less like work and more like a fascinating deep dive.

How Will You Generate Prospective Investments?

Finding potential investments involves scanning the market, reading financial news, and keeping an eye on the performance of various sectors. It’s all about staying informed and being ready to act when opportunities arise.

Top Penny Stocks to Watch in 2023

© Millionaire Media, LLC

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…

SoFi Technologies Inc. (NASDAQ: SOFI) — The Banking Crisis Hedge Penny Stock

My first 2023 penny stock pick is SoFi Technologies Inc. (NASDAQ: SOFI).

SOFI is part of a sector that’s undergoing seismic shifts due to the ongoing banking crisis… financial technology, or fintech.

Traditional banks are in trouble, and some are failing. But here’s the thing — tragedy often leads to opportunity.

Fintech companies, particularly those offering digital banking and lending, are stepping up to fill the void. SOFI is a prime example.

SOFI had a rough 2022, but a major turning point is on the horizon: the end of the federal student loan repayment pause in August 2023.

The end of this pause, in effect since early 2020, should get the ball rolling again for SOFI.

SOFI’s been on a tear in May and June 2023 — rising 100%. This could be just the beginning.

CXApp Inc. (NASDAQ: CXAI) — The Low-Float AI Stock Supernova

My second 2023 penny stock pick is CXApp Inc. (NASDAQ: CXAI).

This is one of the hottest runners in 2023.

It first spiked on April 13. In May it spiked again.

In June, it looks like it’s consolidating near its highs. It might be setting the table for another leg up.

Some days CXAI is pretty thinly traded. It’s been able to hold support due to its tiny 1.7 million share float and the strength of the AI sector…

When news hits, this thing can really spike (check out its 1,000% push in mid-April). But the otherwise thin volume can mean lots of volatility combined with poor liquidity.

Carvana Co. (NYSE: CVNA) — The Short Squeeze Stock

My third 2023 stock pick is Carvana Co. (NYSE: CVNA).

The short squeeze du jour is CVNA… It’s riding a 700% run into mid-2023 and showing no sign of slowing down!

It started the year as a penny stock. Right now, it’s something else.

Short interest has hovered around 50%. Don’t think that Reddit traders don’t notice.

The shorts have a point. Year-over-year revenue is down 25%. Share value is down 89% from its 2021 peak!

The point for traders is that this stock is in the midst of a technical breakout. I wouldn’t hold this stock for the next five years, but right now it’s looking pretty squeezy.

Trading Challenge

© Millionaire Media, LLC

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.

You’ll get access to the same video lessons, DVDs, weekly webinars, and chat room as my top students.

Top Penny Stocks Under 10 Cents

I occasionally trade stocks that cost literal pennies. Here are a few examples of my trades on stocks under 10 cents…

DSG Global Inc. (OTCQB: DSGT)

In 2020, 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 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) as a low-priced EV sympathy play….

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.

Is Penny Stock Trading Worth It?

Penny stock trading isn’t for all day traders. It’s risky and unpredictable. But for some, the potential rewards are worth the risks. If you’re disciplined, do your homework, and stay vigilant about managing risk, it can be a profitable venture.

What are the Best Day Trading Stocks 2023?

Predicting the “best” stocks for day trading isn’t a simple task. It depends on market trends, economic indicators, and the trader’s personal strategy.

The best advice? Do your homework, stay informed, and be ready to adapt as market conditions change. You’re not going to find the next Apple, but you might be able to rack up some small profits.

Conclusion: Top Penny Stocks for Day Trading

© Millionaire Media, LLC

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.

I’ve made over $7.4 million by recognizing the top penny stocks for day trading and the repeating patterns. And I teach everything I know to my students in my Trading Challenge.

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!


How much has this post helped you?


Leave a reply


Author card Timothy Sykes picture

Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

Post image

Get my weekly watchlist, free

Sign up to jump start your trading education!

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (205) 851-0506 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”