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published on May 18, 2022
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Best Penny Stocks
The above best penny stocks list does not include OTC penny stocks. You can visit the OTC penny stocks to find stocks that are trading on the OTCBB market.
Please be aware that this list does not suggest any penny stocks to buy or to sell, it is just the top penny stocks today.
The top penny stocks list is sorted by percentage gain of the day. If you want to find penny stocks with other conditions, you can use our penny stock screener.
The penny stock screener allows you to find stocks based on volume and price. For example, you can easily find any stocks under $1 with a volume over 10 million.
How to Trade Penny Stocks
There are two major elements that we must acquire in order to make money trading penny stocks, a profitable pattern, and a winning attitude.
Step 1: Finding a Winning Penny Stock Chart Pattern
Finding a winning pattern is the first step that we should do if we want to succeed in penny stocks trading.
We should find patterns that have worked well in the past, and then apply these patterns to our future trades. Recognizing a profitable pattern is our edge in the stock market.
Remember, when one trader makes money, there is someone else who lost it. Nobody wants to lose money, but hardly anyone who participates in the stock market spends any time learning and understanding how the market works.
The stock market is not easy to beat and penny stocks are even harder. In order to make money from penny stocks, you need to have an edge against the other traders.
Finding a profitable pattern is your edge. Some patterns may work 25% of the time, some work 50% and others more than 70% of the time. However, don't expect a pattern to work 100% of the time.
How do we find these types of patterns? Not from gurus or listening to tips from a friend, but by studying the stock charts yourself. You must study the daily gainers and losers and save these charts so that you can study and find profitable patterns from these charts. Start with the top 10 penny stock charts that we post each day at the bottom of this page.
After you compile enough data and find a winning pattern, you want to bet your money on the patterns that have a high percentage of winning. If you have a small account, you want to trade only the patterns with at least a 70% chance of winning rate and pass on all the other patterns until you grow your account.
In Complete Guide to Penny Stocks Trading, I have shared a pattern that works fairly well for me. I also shared some of the penny stock strategies and my mental approach to trading.
Step 2: Develop a Winning Attitude
The second element in trading is a winning attitude which is even more important than a profitable pattern.
As I stated above, no pattern will work 100% of the time, not even close. Even worse, some patterns may work well for a period of time and then stop working.
It is during those times when a pattern fails to perform, trading discipline will make or break a trader. A winning trader knows when to cut losses and move on when a trade fails whereas a losing trader may hang on to a losing trade for far too long until it is too late to get out.
Most traders develop discipline the hard way myself included. They fail to see the importance of mental attitude even though they may have read from somewhere that psychology plays a key role in trading.
Here are a few major mistakes that most traders make that ultimately crush their ego and portfolio.
- Overtrade - For beginners and even some experienced traders, they tend to overtrade. They are impatient and don't wait for their perfect pattern. Remember, it may take a couple of days or even weeks for the profitable pattern to appear. During this time, it is best just to be idle instead of placing random trades. However, traders without discipline do the exact opposite. They want to make money as fast as possible, and so they trade patterns that don't have a good percentage of winning rate.
- Focus on the money instead of the pattern - Some people are so emotional that they only focus on how much they are going to make or lose on a particular trade rather than the pattern itself. If you don't have faith in the pattern, then you shouldn't make that trade in the first place. The market doesn't care about how much you make or lose on any stock, you must plan ahead and trade only the patterns that you found to work well in the past.
- Anticipate the pattern rather than waiting for the pattern to occur - Some traders place trades way too early. As soon as they see a potential pattern that may be forming, they jump on and wait for the pattern to take place. They may get lucky once or twice, make some money, and enhance their ego. Unfortunately, most of the time the profitable pattern doesn't appear, so they lose more money anticipating rather than waiting. Even worse, they get stopped out early on a trade and then watch the pattern actually appear and miss out on huge profits. They kick themselves and what they do next is to set a wider stop loss for the next trade which compounds the mistake of getting in too early.
- Trading without stop loss - Trading without a stop loss is the worst mistake that a trader can ever make. Some traders have a big ego that they will never take a loss on any trade, so they allow a small loss to turn into a disaster. Remember, most penny stocks go bankrupt in the long run, holding a losing position for too long will mean that you may lose 100% of the money on that trade. You do that a couple of times, your whole portfolio will be wiped out.
- Trading without a plan - Whenever you place a trade, you must have a plan of when to take profit and when to exit the trade if the trade goes against you. Not only do you need to have a plan, but you also need to have the discipline to execute your plan. It is much easier to plan logically before you place a trade. Once your money is in the trade, it is already too late to make plans. Your emotions will take over your logic for the trade.
- Trading with the money they can't afford to lose - Trading is risky. You should trade only with the money that you can afford to lose. If you need that money to buy food and pay rent, then you shouldn't trade with that money. Otherwise, you won't make good decisions and eventually, you will lose all that money. Instead, get a part-time job or something and save money until you have the kind of money that you can afford to lose.
The above are the mistakes that I see traders make all the time. When you make a bad trade, not only do you lose money, you also lose self confidence. You lose faith in your trading method, and all you want to do is to make back the money that you just lost. In the end, you will lose even more and faster.
Developing a winning attitude is critical if you want to make money trading penny stocks and it takes time, effort, and experience. The stock market has been around for a long time and it will continue to be here, so do not rush to the market until you are ready.
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