Hot Penny Stocks To Watch

There is one thing that separates professional traders from amateurs. They know which penny stocks to watch and when. These penny stock traders are always in the know and can be your biggest allies. I’ve put together this no B.S. guide to help you find profitable trades that can help put thousands of dollars in your bank account and help you get that dream house, boat or car you’ve always wanted.

1. Join Free Penny Stock Newsletters

If you are not already on several penny stock newsletters you need to be on them. This is the most important thing you can do as a trader. Experienced penny stock traders know how to play the pump and dump. First you should create a dedicated e-mail account only for penny stock trading. You are going to get lots of penny stock alerts and you don’t want these e-mails cluttering up your personal account.

There are a lot of inferior newsletters out there and If I send you on a quest and you start signing up there is a high probability you will lose some money – you will learn a lot by losing but I am all for learning while you win… so for the highest probability of winning with penny stock you can sign up for our newsletter!

What is the pump and dump? I’m going to take you behind the magician’s curtain and tell you exactly how the game works. Trading penny stocks is all about the company and the newsletter promoting the stock making money. No matter what they say, they don’t care about you. So be ready to drop a newsletter that is consistently taking you into bad positions. Now you might be asking yourself, why do I need to be on these penny stock newsletters? These e-mail blasts that go out invite liquidity in what would otherwise be a fairly low volume stock. This gives you the opportunity to make money.

The goal of the penny stock newsletter is to sell a story about how this company has great things going on and will be an outstanding investment. They want you to buy shares, here is why. Either the company has paid the newsletter cash or given them shares to promote the stock. If they were given shares, you can bet that the newsletter is selling you shares to cash out. If they were given cash, this means the company will be selling shares to you, which is called dilution. They will claim this is to raise capital to grow the business. The reality it is so the CEO can raise $50,000 or $100,000 and go on vacation for the rest of the year. You’ll quickly discover that the same person is the CEO of many penny stock companies.

I know this is hard, but don’t believe anything you read in the news press releases. Just keep reminding yourself that it is all a game. There will never be a buyout or that magical oil find. So this is how you make money. You become a momentum or technical analysis trader, not an investor. Penny stock investors are the people who lose all of their money because they believe the company’s lies, we also call them “longs.” These are the people that will insist the company is doing great things on the stock message boards. Also remember some of these longs might be paid promoters; just like their are paid promoters their are paid stock bashers who want the share price to go down. These people are either using an offshore brokerage and are shorting shares or they are looking to try and entire a position at a discount and then flip their shares out at a higher price.

As you get more involved with trading, you will start to notice that many of the e-mail newsletters are actually coming from the same company and they just have multiple lists. You can then unsubscribe to the duplicate newsletters. Another common practice is for a company to hire several newsletters, but will tell them to release their new pick several days apart. The thought is this will help maintain momentum, although most penny stock promotions fail after the first two or three days. You can use this to your advantage because you can get in first on stocks that haven’t been promoted yet and you can avoid stocks that being pushed by their third and fourth newsletter. If you still have not signed up for any free newsletters, do it now!

2. Develop A List of Penny Stocks to Watch

Here is today’s list of OTCBB penny stocks to watch. An OTCBB penny stock is a company that is fully reporting and is usually considered less risky than other penny stocks. This is because financial reports and share counts are readily available. Most traders would say that OTCBB companies are more transparent, but this doesn’t mean that their CEOs don’t lie and that they aren’t promoted like other stocks. It is always your duty to do your due diligence and know how to play the game. Also be carefully when trading OTCBB stocks because you can occasionally get caught in a position of low volume where it is hard to exit a trade.

This is today’s list of hot pink sheets stocks. A pink sheet stock company does not have to report financial data to the SEC and are considered less transparent. These penny stocks make up the majority of the micro cap world and are heavily promoted by penny stock newsletters. One thing that you should also do before entering a trade is calling the transfer agent to get the authorized, outstanding and float share counts. If the transfer agent says that this information in unavailable then be sure to ask why. Sometimes the company will “gag” the transfer agent which typically means they are getting ready to dilute or do something that will negatively impact traders and investors.

3. Learn How to Trade the News

As a momentum trader a ton of money is made and lost on press releases. A great press release can send a stock sky rocketing, while even a mediocre one can send a stock plummeting. Here are essentially my rules for trading the news. If a company releases a statement about a buyout, reverse merger or FDA approval I buy without looking at a stock chart or doing any due diligence. This is news that you need to react to immediately. When I see a press release for a forward stock split, good earnings or large contract I will usually check a stock chart to make sure the stock has not already been promoted. If not, this is usually my signal to take a position before others do. On breaking news, the stock price will quickly run up and I will usually take my profit on the first day or wait for a gap up in the morning if the news came at the end of the day.

You also need to have a news filter. Some companies put out a press release every day and it just gets ignored by other investors, so you cannot expect buying volume to enter these stocks. One important key is anticipation. If the new is good an is unexpected expect the share price to increase. If everyone has anticipated the good news is coming, this is already reflected in the share price and the stock will go down once the press release comes out.

Sometimes bad news will be released, like a reverse stock split. This is an indicator that the company is getting ready to dilute more shares. I will always exit my position as quickly as I can liquidate. You don’t want to be the person holding the bag. Also do not think that you should come in later and catch the falling knife. In the event of a reverse stock split, there is going to be a decline in share price overall several months.

You can actually make a pretty good living trading only news alerts. There may only be a few great trades every month, but most experience traders can make $10,000 or more per month using this strategy.

4. Learn How to Trade Using Technical Analysis

Technical Analysis or T.A. is pretty much B.S. and is just something that many traders use to help promote a stock. Just like saying that fundamentals really matter beyond share count. Essentially technical analysis in the penny stock world becomes a self fulfilling prophecy. Traders will paint the stock at the end of the day to make a pattern continue. Essentially you want to learn some basic technical analysis candle stick patterns. The most important patterns you can learn are the pinch, double bottom, double top, ascending triangle and descending triangle. You should also develop a good understand of support and resistance. This will give you good entry, exit, breakout and breakdown points of reference. Just by entering in the correct spots you will make thousands of dollars.