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How I Pick Penny Stocks


This is not rocket science or brain surgery. It is probably more complicated, since rockets and brain surgery are pretty much exact sciences. Stock picking is not always the same. A slew of factors go into the thought process behind picking the exact stock tickers to play. Here are most of the factors we consider when picking plays.

Throughout every trading day, we scan the OTC Markets, NYSE, NASDAQ, and AMEX looking for those stocks under $1.00 that are currently showing the best percentage gains. We then track them for a day or so to see if they have any more room in the tank for Northern Movement. Then, of course, we learn what started to move them to begin with.

Pretend that penny stock picking is comparable to creating the World we Live In. Look upon the Balance Sheet and the MOMO as The Money Maker. Does the company have sufficient cash and assets to keep it afloat for the next year? Remember we’re looking for quick bounces, not long-term holding. Is it stuffed like a fat pig with too many liabilities, such as a very heavy debt load? If the Balance Sheet seems reasonably sound, then, half the work is done.

For the most part at our price point you will not even see analyst rankings. We do not really give this much weight, but seeing analysts covering a company does provide some degree of comfort.
It’s always nice to see institutional ownership; however, we do not give this much weight, either, except if a brokerage(s) owns a good chunk of a company. This allows us to think that they would truly want to see this company succeed.

You want the company to be relatively easy to understand - after all, who needs a mathematics lesson. Is the Stock Ticker in a hot industry sector? If it's high tech or biotech, do they own any type of proprietary technology? Do they have any patents? How many patents do they have? How is their customer base, and how large is it? Then, we read all of their recent news, which can steer us toward a better vision of their short-term future.

Besides looking into all of the above with every penny stock potential play, we also look at potential target prices on all of the picks. However, you will want to choose a target price that feels good to you.
We suggest selecting four to six stocks - no need to do it all at once; wade into it. Only pick those that put you ease with your comfort level. Do not bet all your money on a penny stocks play - also known as small cap stocks and micro-cap stocks. I recommend only allocating 10% to 15% of your total investment dollars.

This formula has been good for me since I started in 2009.


Transparent Traders is a group that networks stock traders of all experience levels. We offer an 8 hour free stock trading course for those who are wanting to learn, or for those who want to take their trades to the next level. We are successful stock traders who believe in giving back to the trading community. Facebook Group: https://www.facebook.com/groups/20987... Discord Server for Transparent Traders: https://discord.gg/KPmvwuy James Mason's YouTube Channel: https://www.youtube.com/channel/UC39b... Transparent Traders Website: https://www.transparenttraders.me WeBull Free Commision, Sign Up Here: https://act.webull.com/invitation/us/...




15 comments:

  1. Hello! Thank you for everything you have done, been following you for a little bit, learning step by step, so I will definitely start with penny stocks, but I don't feel secure to start yet. Could I use the discord server to show my choices and see if they are good ones? Sorry to bother you!

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    1. Kayla, 100% yes, that is what the Discord Chat is for. Look forward to seeing you there.

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  2. Thank you for going deep on investing in stocks at a time when new investors are considering mutual funds, alt coin, and bonds.

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    1. Your welcome Paul, feel free to always reach out with any questions.

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  3. Thank you for sharing this information. It is very helpful.

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    1. Cynthia, I'm glad you enjoyed the article. Feel free to reach out with any questions.

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  4. Well, I think this is the most valuable article of all, after all the basic knowledge, it's time to make decisions. Pretty simple explained. This is kind of random field, but then we have stuff like this to make us secure of our movements. Do you still apply this formula?

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  5. Your analysis and comparison to things in the real world really help me to better understand what I am dealing with. I've never dealt with penny stocks but I'm hoping to be at least proficient in them after learning a bit from this website.

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  6. I love how you share that you should only invest around 10% to 15% of your total amount in penny stocks. As most of you know penny stocks are incredibly risky and can either bring large gains or enormous losses. It all depends on the right stock. Make sure you look into the company before you invest.

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  7. I am loving reading over your articles and blog posts about stocks. However, I'm new to stock trading and was wondering if you had an article that outlined all the stock market lingo?

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    1. Yes please! wanted to start the free course and at the beginning I was feeling already lost! A friend told me to learn here to start getting another income but I think the hardest thing is that I don't understand a big part of the lingo!

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  8. Picking penny stocks is not an easy task to do. There is so much risk behind it that you need to find a method that works well for you. We're all different types of traders and all need to embrace that.

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  9. Haha love the humor! indeed looks way more complicated than brain surgery sometimes! But we got many tools in our hands to deal with it.
    Good system, cool information, very valuable to share, thanks! Will show this to some friends, hope they decide to take the jump.

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  10. Hey everyone! I just wanted to share that I've been in the Facebook group for a couple weeks now and have learned so much. If you haven't joined yet I highly suggest checking it out. Thanks so much for everything you do!

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