What Are Penny Stocks, How To Trade Them, And 3 To Watch Out For


How to trade Penny Stocks at the end of 2021

With the end of 2021 for penny stocks as quickly as it started, investors continue to seek out the best small caps to buy. To understand how to find worthy penny stocks, you first need a thorough understanding of what penny stocks are. This is a multi-faceted question with several answers that investors should consider.

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To begin with, we need to understand the definition of penny stocks. This is crucial for considering how they trade and how to benefit from it. The next step is to figure out what is currently causing the movement of the penny stocks and if one can make money with them. Finally, investors should have a thorough and consistent understanding of their own unique trading strategies. This is arguably the most crucial part as it will define whether or not you can make money with penny stocks.

Ultimately, buying and selling penny stocks is all about having a unique edge and using a consistent strategy. While it might seem like a game at times, there are definitive ways to improve your chances of making money in 2021. With all of that in mind, let’s take a look at how to trade penny and three-rated stocks to watch out for then. as 2021 draws to a close. .

How to trade Penny Stocks in 2021

  1. What are Penny Stocks?
  2. What Factors Are Impacting Penny Stocks Right Now?
  3. How To Trade Penny Stocks

What are Penny Stocks?

By definition, penny stocks are stocks that trade for less than $ 5 per share. Yes it is that easy. However, there is more to understand. Before we go any further, it should be noted that penny stocks are generally quite volatile. This can mean very large price fluctuations in either direction during a trading day.

Accordingly, investors should be careful and understand the risk of losing their entire investment or, hopefully, the opposite. Since penny stocks are securities under $ 5, there are hundreds of options to choose from. While many believe that penny stocks only trade on the OTC or Pink Sheet exchanges, most tend to focus on those traded on large exchanges such as the NASDAQ or the NYSE.

An important aspect to consider with penny stocks or any other related stock is volume. Volume is the number of shares of a stock traded on a given day. Normal volume is 1 million and above, while volume over 5 million may be high and below 1 million may be low. Of course, this varies depending on the price of a stock and its popularity. If the volume is very high, it may indicate that a stock is more popular than usual and the same is true of the reverse. In addition, volume has a direct impact on liquidity. So with all of that in mind, there are a lot of penny stocks to watch out for right now.

What Factors Are Impacting Penny Stocks Right Now?

The most important factor impacting penny stocks right now is the Omicron variant. This variant appeared a few weeks ago and has many mutations that the other variants do not have.

impacting penny stocks now

As a result, the transmissibility is extremely high although the severity of the disease is quite low. This causes a considerable amount of negative momentum and overall volatility. Over the past few weeks we have seen several massive sales due to the Omicron variant. And in the last few trading days, that has increased dramatically as fears continue to be rekindled by the increase in the number of cases and closures.

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Next on the list is inflation. Inflation is the result of billions of dollars in stimulus packages given over the past two years alongside the pandemic itself. Although this is the result of the pandemic, it has become its own symptom. So, we see that all of these factors together create the highly volatile market and the large fluctuations characteristic of the stock market in 2021.

How To Trade Penny Stocks

When it comes to trading penny stocks, there are two distinct strategies that investors tend to lean towards. The first and most common is the swing trading method. It involves finding short-term trends to take advantage of them. Swing trading can be done in minutes to days and anything in between. This is a great strategy with penny stocks because it takes advantage of the frequent moves we see with small caps.

best penny stocks to buy

The next strategy traders use is less common, although it can be useful if used correctly. This strategy is long term trading, as the name clearly suggests. Long-term trading uses the potential of penny stocks to escape the status of penny stocks. While this is not as common as small movements, it does happen sometimes.

Both strategies are based on a consistent understanding of your own trading style and how to benefit from it. And as mentioned earlier, buying and selling of penny stocks should be done with the assumption that prices change and will change very frequently. With that in mind, it all comes down to deducing the strategy you will use.

3 Penny Stocks To Watch Right Now

  1. Petros Pharmaceuticals Inc. (NASDAQ: PTPI)
  2. New Gold Inc. (NYSE: NGD)
  3. SeaChange International Inc. (NASDAQ: SEAC)

What Penny Stocks are you looking at right now?

If you are looking for the best penny stocks to buy, there are hundreds of options to choose from. Due to the large number of penny stocks, it can be difficult to select just a handful for your watchlist. But, with the right research by your side and a consistent understanding of what affects penny stocks, it can be a lot easier than previously imagined.

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With this in mind, always be aware that the value of stocks quoted in cents can change very frequently. And although it is well known, many investors forget and end up losing money. So, with all of that in mind, what penny stocks are you looking at right now?


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