21 Tips for Trading Penny Stocks


I’m going to give you 21 Tips for Trading
Penny Stocks. Check it out!! The top managers and the executives of any company and the
insiders are notorious for making bad trading decisions. You should never rely on insider
trading to tell you anything where the share price potential is headed. There is a lot
going on with the reasons that insiders are buying and selling shares some of which have
nothing to do with the company. You should never rely on insider trading to tell you anything
about the direction of the share price. Always use limit orders when trading penny stocks
as opposed to market orders. Only trade penny stocks from the Bulletin Board or the major
Markets. Do not trade penny stocks which are on the Pink Sheets and other dark markets.
You should only use candle stick trading charts when looking at penny stocks. If you don’t
understand what candle stick charts are, or you don’t understand how to read them then
there is a video that we will put a link to which will explain everything. Its my explanation
of how candle stick charts work and all the benefits that there are with them. So check
it out! Share holder turn over is the utmost importance when trading penny stocks. When
you see at least 25% of the total outstanding shares trading over the course of weeks or
a couple of months. At the same time when the share price has not really changed not
either higher nor lower, then you can assume great share of share holder turn over. Whats
happening is that long time share holder , frustrated investors are getting rid of their shares.
At the same time that selling pressure is being met by buying demand by new share holders.
The share holder base is turning over so the mix is gone, more newer investors and fewer
long term investors. By their nature a newer investor is much less likely to sell their
shares. They just bought, they’re expecting the shares to go higher and thats why they
got involved in the first place. The trading volume of a penny stock is going to tell you
a lot more then the trading activity. So its great to know the price of the shares are
at but even more important is to look at how many shares trading to put the shares to that
price. If you watch the trading volume you get an idea of things like; the sustainability
of the price moves and share holder turn over. Typically when you look at a trading chart
you’re gonna see the price of the stock on the top half of the chart and the bottom half
of the chart you’re gonna see the trading volume. So even if you’re doing any kind of
technical analysis at all using the trading chart to try and predict what share price
is going to do. You need to make sure that any patterns you see are formed by enough
trading volume or else they are entirely unreliable. For example, if you see a stock jump up 75%
or 115% but it did that on only 400 shares traded. You can be certain that the share
price activity is going to reverse and the stock is going to come back down. With penny
stocks its so important to watch the management team. People tend to do what they have always
done. So if the current CEO of the current stock you are watching has bankrupted 3 of
the last 5 companies they were with they’ll probably be pretty bad for this one too. So
do a quick google search on all the top executives and management. Take a look at what companies
they were with previously? What positions did they hold? How did the companies they
were with perform during their tenure. Insider and Institutional investor holdings are so
important when trading penny stocks. If, 95% of shares are held by mutual fund managers
and hedge fund managers. Then that only leaves about 5% of the shares which you see traded
day to day to retail investors like you and I. Since institutional investors are usually
in it for a much longer time frame. All the trades you are seeing are usually are just
retail investors like you and I and are typically over done and they usually will reverse. This
is why its so important to keep an eye on the institutional ownership of a penny stock
and try to get an idea of how many shares are out there that are being actively traded
compared to how many shares out there that are being held long term but professional
traders. The impact of artificial events will typically be temporary. By artificial I mean
things like government grants, stock promotions, government subsidies, stock by back plans.
For example; if there is a stock by back plan in a penny stock, they are buying the their
shares and taking them off the market and that’s going to create artificial demand.
That artificial demand will increase the price of the shares temporarily. Eventually when
that buy back has ended the share price will trade to where it would have been trading
to in the first place if it weren’t for the buy back. Read “Penny Stocks for Dummies!”
Yes I’m bias because I wrote the book, and if you buy it I make a small royalty but this
is the book I wish I had read when I got started trading penny stocks at 14 years old. It would
have helped me avoid thousands of dollars in stupid mistakes and it would have helped
me make thousands of dollars more. If you don’t want to spend the $23 for it then take
it out from the library or borrow it from a friend. Any one interested in Penny Stocks
should read “Penny Stocks for Dummies.” Most penny stock investors average down when they
are holding shares of a stock which they bought and then it decreased in price. They buy more
of a losing company to try to bring their average price per share down but their actually
just throwing more good money after bad. Typically when you average down you’ve already made
a mistake when you tired to pick that stock in the first place and now you’re just putting
money into that losing investment and it typically tends to keep on going down. Whats better
and a more effective strategy that we’ve found in our opinion, is to average up. When you
buy shares of a penny stock and it starts to move in the right direction then you put
more money in to the winning bet because that stock maybe, is just getting started and its
got a lot higher to go. When trading penny stocks always use stop loss orders. With penny
stocks its so important to make sure that your small losses don’t become big losses
and stop losses is one way to do this. On the other side of the coin when you do have
a stock that is going in the right direction then you want to let the gains run. Penny
stocks typically have a way of going up a lot more then you would anticipate that they
could in the first place. Investors sentiment is a contrarian indicator. When everyone believes
that a stock is going to fall or collapse in price the shares are more likely to go
in the exact opposite direction. This is because people act on their beliefs. If everyone is
expecting the stock market to crash, everybody is selling their shares. What happens then
is when everyone who wants to sell has done so, even a little bit of buying turns things
around and starts driving the prices higher. Penny stocks whether in an up trend or down
trend are most likely to continue on in that exact same trend. Now, they will eventually
break out of that trend and reverse but its very difficult to time and anticipate when
that change of direction may occur. SO the trends you need to understand will typically
last a lot longer then people would expect and a lot longer then they should. Always
get started with trading penny stocks just like I did, by paper trading. You need to
notice and avoid your own confirmation bias. People see what they want to see and if you
see two sides of one argument you may gravitate towards the one side that supports your opinion.
This can be incredibly costly for trading penny stocks. You need to notice and avoid
all of your own confirmation bias and just look at the objective facts. Do not believe
or blindly follow what the mass media is telling you. Instead use it as a tool to understand
what the masses are going to be believing, how they are going to be acting. This is going
to help you avoid getting involved in investments at over priced levels because everyone’s crowding
around to buy the same thing. Out of this understand the way the media works and understanding
the impact media has on the masses of society. It’s going to open up so many more massive
opportunities for you that gonna make all the difference. Invest in penny stocks in
penny stock companies which you understand and then call the investor relations contact
of those companies and ask questions, try the products or services that they sell if
you are able. Even better make an unannounced drop by of their head office if its possible
just to see whats going on , see what kind of company you’re dealing with. In other words,
invest your time before you invest your money. Penny stock picks which you hear about for
free regardless of how you heard about them when you hear about them for free there is
always hidden motivations behind those stock picks. This is even true of the stocks that
you hear through the rumour mill or the co worker who tells you about this new hot investment.
Your poor co worker doesn’t even realize that they have fallen victim to the promoters “pump
and dump” scheme in the feeding of the rumours that they are putting out there. You need
to avoid free stock picks, people get burned by this more then anything else in penny stocks.
Only trust penny stock picks which come from a service with a 100% unbiased guarantee. This is the
only way that you are going to know that they have your best interest at heart and they
put your interests first. My team and I have found that the most effective way to find
and trade penny stocks is to locate the high quality companies first using extensive fundamental
analysis. Then we use technical analysis to try and find the most opportune buying and
selling prices of those stocks. So thank you so much, I really hope this helps a lot! You
guys are awesome, I want you to learn how to trade penny stocks really well because
it can make a big difference to you. Please subscribe to the channel we’ve got a lot more
videos like this coming out, designed to help you profit from trading penny stocks. If you
have any questions, please put them in the comment fields immediately below this video
or reach out and get in touch with us. We will answer you and we look forward to speaking
with you. Thank you so much!

42 thoughts on “21 Tips for Trading Penny Stocks

  1. Peter,
    Great advice when it comes to shareholder turnover rate. This will be something I am going to try and incorporate into my trading on a daily basis.
    Averaging down, I've never understood why investors would do this. Any time my investment is going up I will buy into that share again.
    I found this video to be great, at times you may get away from your trading rules and this video will help you to keep your "head in the game".
    Thanks again Peter!

  2. Could you please do a video on taxation (US) and trading? especially when doing quick trading and buying back same shares etc.,

  3. If you have opportunity and a free minute please email me at [email protected], I am a beginner at stock trades and my boss wants to invest into me, he thinks I would be a natural at this but it seems that this simply takes research and sheer luck not being a excellent sales men, I understand if you to busy for a silly email but if you do email me that would be GREAT

  4. I bought and read your book…which lead me to your YT channel. Hopefully, I will be starting up my account soon.

  5. Petter,
    I am using etrade as broker. Your step by step should be something like this?
    1. Buy a stock.
    2. Just after buying should I place a stop limit or should I place a stop trail %

  6. hey peter lets say for example i start with 100$ from my debit card for penny stocks and lets say i loose i dont make any profit will it take out more money from my debit card or it would just leave me at 0$ and wait for me to but like another 100$ or so..? pritty much my question is if there going to have access to my card and prior to that do you recommend a website?

  7. I just received Penny Stocks for Dummies a few days ago! How serendipitous I would find your channel as well. I have very much enjoyed the content you have provided thus far. I am down $2500 in this red market but with learning from your lessons, some dogged determination and a bit of luck i'll recover and be on my way!

  8. you claim institutional investors are in for the long-term, but what of the fact that most institutional investors such as pension funds have older clients such as my father's generation who will soon begin to receive monthly checks when they start cashing out of their pensions? isn't this an opportunity to short stocks that have high percentage of institutional investors?

  9. Hey Peter. I've been learning penny stocks for the past weeks. I want to get in papertrading before hiring a broker and work with real money. But I'm a bit stuck where to begin. I know how to do it, but I don't know where I can find potential stocks and overall penny stocks. I would love to see an answer!

  10. Thank you for your channel. I just found it and find that you are probably one of the most sincere among the others giving advice. I started trading penny stocks about a year and a half ago. I have taught myself how to read charts to some degree and have had some success. I am going to make it a point to buy your book and use it to further my success moving forward. Thanks again..

  11. I've just started looking into penny stocks, still don't really getting it, but your videos are helping, i'm 17 and i need parental signing before i can start.
    How much money do you think i need to start off with?

  12. As a beginner I liked to due this butt my work employment and living expenses have bottled me up for trying this how to start with penny stock so much interested in this Kevin

  13. What do i do about order time when trading penny stocks? It takes some time for my order to go thorough with my broker (RBC Direct Investing) and im assuming that this is the same for most. When time is so crucial with penny stocks, how do I approach this? – New trader

  14. Hi peter,
    i just recently wanted to try dipping my feet in the water of penny stock. i was just wondering do you know much about the site/app RobinHood? because its free stock trading and i think eTrade charges $10 for stock trading? awesome channel btw going to watch more of your videos 🙂

  15. It was so informative and you seem really a genuine guy. I just found your channel. I have started watching all your videos. Hope it will help me greatly. Thanks again!

  16. Good point to keep a watch on volume (shares traded) when a stock price jumps in price. I've been caught in reversals before. No fun.

  17. Dear Mr. Leeds, what video would you recommend to a person who is completely oblivious to the market?

  18. Hi Peter! I am an international student in the US and I am learning everyday about penny stocks to start investing as soon as I am ready. I would like to ask your opinion about which is the best paper trading website to practice, and also which is the best online broker to use once I get started. Thanks!

  19. Peter you are a GOD send penny stock for dummies is the best book by far I love your videos keep up the great work and say thanks to your team from me. BRIAN.

  20. Great videos, and very insightful as always.

    Question: How are companies not delisted when they're under $1 , according to SEC rule you would be? They can be granted a 180 days extension and can file a plea if they can pay the fees. I've yet to find anyone answer the question and seems like most people believe either it's not true or SEC doesn't care (corrupt?). Even 1 Youtuber said anyone under $5 is a penny stock and such penny stocks companies can't trade in the afterhours of 9-4pm (obviously wrong). Some example stocks that have been under $1 for over a yr for example; MNGA, FALC, CYTR. Appreciate the great videos, keep them up!

  21. thank you thank you. I can finally understand. It's so hard to find a teacher for beginners even though so many market themselves as that.

  22. This was a very good video. I found ti to be proof that we can get it done..Me being one of them. Thank you Peter Leeds for all your work. Peace 🙂

  23. Having read Penny stocks for Dummies, I can say that Peter's book is worth reading. Get the book on Amazon. You will be happy you did. I have been active in the market since 1987 and Peter's book still taught me stuff I did not know. Well worth it!

  24. can I get a list of past archived recommendation. I read a review or two that the success rate has diminished in recent times.

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