- Advertisement -spot_img
HomeStocks Trading StrategiesIntraday Trading StrategiesPenny Stocks Intraday Trading Strategy - Learn Stock Trading

Penny Stocks Intraday Trading Strategy – Learn Stock Trading

What are penny stocks?

The Securities and Exchange Commission (SEC) defines the penny stock as any less than $500 per share security trading. Most companies are comparatively new, with small market capitalization and have not set a track record as popular dealings that lead to hypothetical reserves for dealers and depositors.

Penny stocks for beginners are low-priced. It means there is no requirement of huge capital to keep you in a big position, and you can get a 100% score or more of them regularly within a single day. This big return has fascinated all sorts of starter entrepreneurs, and it is the main reason for their publicity.

OTC Penny Stocks vs. NYSE/NASDAQ Penny Stocks

If one of you watches Wolf of Wall Street with the Jordan Belfort movie, he can remember, in this movie, they were trading penny stocks known as pink sheets. These penny stocks trade over the counter (OTCs). It shows that they are not registered on the NYSE or NASDAQ exchanges and are companies that do not comply with the severe economic requirements obligatory for large exchanges. You must be completely clear about your finances, and your stock must be above 1.00 per share to be registered on the major national exchanges.

Avoid OTC Penny Stocks

Companies that are unwilling or unable to give overall economic documentation that cannot hold more than $1.00 per share or those that have entered bankruptcy will trade in OTC markets. Mostly due to lack of regulation and liquidity in the OTC market, we avoid trade money stocks over the counter. They are more sensitive to handling, which makes it risky for trade. Penny stocks registered on exchanges such as the NYSE or NASDAQ is where we focus. They are capable of doing large-scale intraday tricks and are affordable enough to take on big positions.

Penny stock four levels

Stock trading less than $ 1.00 was nearly always small companies trying to get their rank in the market, and finally, these securities were a very projected stock for dealers or depositors. Presently in several situations, securities prices range between $1-10.00 still signify some highly speculative and risky reserves. In the case of small businesses in the Biotech, internet, and fantasy sectors, it is particularly real. Such stocks can arise with news overnight, resulting in a 50% decline or a 100% downward trend or a 100% crush to the benefit. Anyone who finances or trades in such securities must be set for a loss.

Penny Stock Tiers

Tier 1

They are registered on a large exchange such as the NYSE or NASDAQ and are typically priced below $5.00 per share but maybe slightly higher. Tier 1 penny stocks are still projected but less open to management due to their exchanges requirement to give financial information and are of a higher standard as compared to OTC penny stocks.

Tier 2

Traditional penny stocks are between 1 cent and 99 cents on a price. They are not under 1 cent. This is not unusual, with prices ranging from 1 cent to 99 cents still registered on the NYSE or NASDAQ. These companies will usually receive a letter stating that they will need to meet certain stock requirements to exceed $1.00 in a given period. If they work, the stock is listed, if they cannot, it will be unlisted and transferred to the OTC market exchange. But, keep it in mind that a stock that trades over $1.00 will never have a spread below 1 penny. It is clear that the stock will trade 1.01 x 1.02, or 1.05 by 1.06, but never 1.015 x 1.017. When a stock trades under $ 1.00, the stock will trade in different parts of a penny.

Tier 3

Sub-penny stocks are stocks that are less than 1 penny per share. So it begins with .0099. This is not mainly notable given the fact that companies are not durable enough to sell their stock at 1 penny per share

Tier 4

Trip Zero Stocks (Priced .0001 – .0009) Trip Zero Stocks 3 zero priced. These stocks value.0001 and .0009 per share. Same, we can suppose these stocks are frequently used as vehicles for management. Any increase in stock is a 100% move against the entry price of .0001. Numerous “hot penny stock” warnings are all about penny stocks or trip zero stocks and chiefly profit those who purchased the stock first. When someone purchases 100mil shares at .0001 ($10k) and the stock increases to .0010, he will trade with $100k in revenue.

Related Article: Bull Call Spread Derivative trading Strategy – Learn Stock Trading

Trading Penny Stocks For Beginners

By trading fewer price deals in the market, you can finance a small amount and earn large revenues. The allure of quick returns draws the crowds into the penny stock market, where many end up losing their shirts.  At the end of the day, just 10% of active merchants in the market will really get revenue.

Find the Best Penny Stocks To Purchase

The first step in successfully trading money stocks is to be in the stocks that are most likely to make strong runs. But how do we know who is going to make the big move? Try to find stocks that only meet my exact parameters that give you a significant shareability to score more runs. The High of Day Momo Scanner is the finest after the market opens. It holds stocks that are growing in large quantities and with your price parameters. The Gap Scanner will point all the stocks to fulfill your volume and price parameters but are also chatting up in the premarket and informing they generally have new substances.

Parameter 1

Breaking News

See the stocks that are declining due to some kind of news catalysts such as FDA approval or earnings, but you want to stay away from any stocks that are there due to not being traded away from their buying cost.

Parameter 2


This is because when a stock has a lower number of shares to trade, and there is a large purchasing focus, then it moves the shares very fast that we are looking for.

Parameter 3

High Relative Volume

Generally, the good news is that stocks will do well in the premarket, it means that this stock will have a lot of liquidity to trade with size.

Penny Stock Chart Patterns

The bull flag pattern is a very simple pattern that can be identified, and it identifies a risk where you know precisely when you are wrong on the trade, and it is best to leave. If you want to see the stock move higher and then pull back the light volume pull, usually an average of 10 or 20 days moving on a 1 or 5-minute chart, where it will find support and the buyer will jump back in to make it higher. The main thing to trading this structure is waiting for the volume to come back inside the pile of buyers and then jump with them.

Another pattern is the flat breakout over the premarket height. Shorts will only keep stop orders at a high level so you know that if it breaks above that we will look at their buy stop orders which will help the stocks to move further. This pattern of risk is not so easy to define so you can go about it in a few different ways. You can use the lower level of the candle that bursts above the height of the premarket or you can use a certain amount for a risk like 20 cents for example.

Are you a Penny Stock Day Trader or a Penny Stock Investor?

Penny stocks are very unstable, random and subject to market management, because it is almost impossible to be an investor. To survive you need to have a short-term outlook, and you need to be one of the first traders to enter and one of the first traders to come out with a profit. Just keep it in mind that a penny stock company can have terrible balance sheets, terrible fundamentals, and then a 200% increase on news of a new partnership.

For this reason, shorting penny stocks expecting the companies will go bankrupt is extremely risky. The fundamentals will matter eventually, but in the meantime, most investors can’t handle holding a position down 200%. I’m a penny stock day trader. Because of this, the lack of money stocks in the hope of companies going bankrupt is very risky. The fundamentals will ultimately matter, but in the meantime, most investors can’t handle a position below 200%.

5 Instructions To Survive Being A Penny Stock Day Trader

Avoid OTC/Pink Sheet-Listed Penny Stocks  

Companies trading in the OTC market have much less rules than stocks listed on the Nasdaq and NYSE. As a result, stocks in the OTC market are highly susceptible to manipulation and fraud.

Avoid to Fall for the Promotional Pumps

Most of the OTC penny stocks grow in one place. These promotions often come with messages such as “This stock will be the next Apple”. In fact, the next Apple Penny is unlikely to come from the stock world. It is more likely that the next major tech company will start out as a large company whose IPO price is well above the stock price range, and then continue to do so. When you are buying money to buy in the hope that it will be the next Apple, you become an investor in one of the most speculative financial instruments in the market.

Trade Penny Stocks with Volume 

It is really important to avoid illegal money laundering. Most money stocks trade only a few thousand shares a day. However, when there is breaking news in a penny stock, they will often trade at 40-50x the relative volume, gaining 5 to 10 million shares of volume on the big day.

The Hit and Run Technique

Once a penny stock meets your criteria for being tradable, you should find one of your Go to setups. These include Momentum, Gap & Go, and Ultras Trades.

Making a Living 1 Trade at a Time 

Just focus to trade on pie stocks almost every day and the daily goal is 500-1k / day. This means an annual profit of anywhere from 100-200 kg. Over the course of weeks, months, and years, many smaller bases targeted ads. You should concentrate on trading instead of investing money in stocks. Many early traders start their trading journey with money stocks. We actively encourage traders to have money stocks and instead traders’ stocks priced at $3-10.00. These are stocks that have the potential to take 20-30% intraday action, but maintain the safety of being listed on the NYSE and NASDAQ.

As a result, they are more popular with traders and are often considered safe vehicles for trade and investment.

Morris is a Technology enthusiast and a writer by night. He has been a part of eTrendy Stock for quite some time and he contributes knowledgeable news articles from the Technology niche. He attended a technical school in Florida.

Must Read

Related News