folks often ask me why being me
practical and charming trader that I am
that I would even bother including penny
stocks in my overall trading inventory
well frankly it's because there's a
decent amount of opportunities in these
and that's usually irregardless of how
the overall market is performing as we
know a slow market can creep into a lot
of different sectors but penny stocks
they tend to move wherever they want now
with that being said I'll be the first
to tell you that penny stocks are not
easy to trade but if you do it right
they are an important part of a
diversified approach to trading so by
the end of this video you will have a
complete understanding of what you need
to do in order to start successfully
trading penny stocks we're going to be
going through a step-by-step guide
starting with what opportunities are
available to us how to find these
opportunities how to analyze their price
action look at SEC filings break down
news catalysts and most importantly rank
their trade ability what makes one penny
stock more tradable than another penny
stock you will also understand where the
best entry and exit points are and how
to predict profitability over many
trades instead of just one trade this is
going to be an information packed video
so brace yourselves and as always the
only thing I ask of you in return for it
is that you hit that beautiful and
ravishing like button and also don't
forget to subscribe if you see value in
the following video so most penny stock
opportunities come in several different
categories first you have the morning
panics you have the breakouts you have
the push backs from up trends and last
you have the catalyst news plays morning
panics happened when a stock opens in
there is an irrational widespread
selling it market open the stock price
dips everyone panics and they sell more
which causes the stock price to go down
even further irrationality of the stock
market 101 this of course happens in a
lot of sectors of the market but it
tends to be more poignant with smaller
caps the key is that if this isn't
caused by a bad news catalyst and if
there is a previous pattern of the stock
having morning panics than recovering
then that means that we could take
advantage of the discount buy in
conformation and then ride to recovery
up and over the SMA line as we know
price action moving close to the SMA
line is a sign of price weakening and
price action moving farther well that's
a sign of price strengthening the key
with these plays is buying into
confirmation and selling out at
validation you won't catch the top with
these but oftentimes
you will get a huge chunk of it if you
play it correctly the next type of
breakouts these are the stocks that are
making higher highs higher highs can
bring in a bunch of do buyers excited to
buy into the hype we call these the
sheep but two sheep basically buy in and
allow the price to go higher and higher
brain and more and more sheep and tell
eventually people just think the stock
is way too overvalued and then it comes
crashing down to add to that shorts tend
to like to start piling in after
breakouts from higher highs breaks of
resistance in these thoughts which means
if we're following level two we could
see if there's a wall of buyer's or
seller's and if there's a big wall of
buyers the stock could then be more
prone to a short squeeze which would
lead to a more rapid increase con with
breakouts those that you're going to
need to distinguish between a breakout
and a genuinely overbought position
we'll talk more about that later but
that leads me to the next one
these are stocks that are becoming
oversold they're having a general push
back from an uptrend for example yuma
establishes higher highs and then has a
pattern of dipping below the SMA line
offering us entry points we can then
plan out to take our entry points at the
push backs from the uptrend we can also
take advantage of buying in at higher
highs but the push back from an uptrend
entry point would offer us more upward
potential overall and the last one
perhaps the most consistent and
lucrative of them is biotech FDA
approvals and phase data releases
specific examples include ADM a and SC
YX both of these were on my top penny
stocks videos and both of these spiked
in the triple digits FDA approvals and
phase data releases are all public
knowledge assessable on sites like
biopharma catalyst I'll put a link in
the description but the key is that last
stage FDA approvals have an 80% chance
of getting past so if we use the
resources available to us to understand
the exact dates that these are coming
out you delve more into them do our due
diligence and figure out formal
hypotheses on what's going to happen but
we're not just guessing whether or not
it's going to be approved we're making a
plan saying okay well I think it's going
to get approved but we're going to make
a plan regardless of whether it gets
approved or what happens if it doesn't
get approved there's been no matter what
happens we follow that plan to a tee we
plan to profit off of either fluctuation
but this does require due diligence like
I said earlier I actually make a video
every month on the top penny stocks in
the biotech sector and what I do in
these videos is I go through each of the
phase data releases as well as FDA
approval dates and I put them all in a
list and then I figure out which ones I
think are going to be the most likely to
provide the price action that we need to
trade off of them and then
about my due diligence in terms of
whether or not I think they're going to
be passed and of course you could check
that out to see an example on how I have
to do the due diligence on those and if
you track back every single stock that
I've talked about except for maybe one
or two has provided the price action
that we need to trade off of they
haven't all gotten approved but they
have all provided price action that we
need to trade off of and what do I mean
by price action well price action is
it's moving it's moving it's providing
us confirmation and validation points
entry and exit points it's providing us
discounted positions it's providing us
with upward potential and the reason
that I'm almost 100% correct on
predicting volatility with those types
of videos is not because I'm a miracle
Wonder gnome but rather because the
companies literally tell you the exact
date at which price changing events will
occur and the next step is how to find
these puppies so what I'll usually do
before scanning for stocks is I'll have
it literally literal notepad and I'll
write down a rough draft watch list
that's it my criteria that I'm going to
want to do more due diligence into after
I go through the scanning process okay
so the first way of scanning let's talk
about how to scan for penny stocks in
all sectors that could potentially meet
your criteria for finding breakouts or
push backs from dips the first way to do
this and this is just the way that I do
it is that I'll use Ganner of my choice
sometimes that's thinkorswim sometimes
that's weeble today we're going to use
fin vis since this should be accessible
to you regardless of the country that
you are in I know that we have a lot of
people that are in different countries
and don't have access to some of the
same brokers that I use so I'm hoping
that this will solve that problem fin V
should be available regardless of the
country that you're in except for maybe
China I know they blocked a lot of
American websites but you head over to
the screener and then you can perform a
technical search the first thing is to
set a high level of beta this is
basically a measure of a stock's overall
volatility in relation to the overall
market if beta is 1 that means it moves
exactly the same as the market if it's
under 1 that means it moves less than
the market and if it is over 1 that
means it is moving faster than the
market since we are looking for
volatility which one do you think that
we're going to use we of course want
something that is moving faster than the
market so at a minimum we want something
over 1 but let's scan 4 over 2 because
that will be a lot more volatile and
will find more setups there's also an
option to select for volatility but I've
never done that this is just the
specifications that worked for me but
mess around with the specifications
until you find that perfect fit that
special someone is out there for
next we want to set it to show us only
penny stocks now the SEC defines a penny
stock as any stock valued at under five
dollars
so I'll set this to under five dollars
if you were one of the penny stock
purists that won't consider anything
over one dollar to be an actual penny
stock that's fine you could set it to
under one dollar that's up to you but
you should know that a lot of
opportunities are in the one to five
dollar range and those are technically
penny stocks as well the next step is
setting an average volume filter there's
a few different ways that you can
approach this but the lowest you want to
go is about a hundred thousand there are
exceptions to this as I've said before
when it comes to needs catalysts these
catalysts can bring a lot more people
into the market which will then bring up
volume but for this step we're just
scanning for stocks that have set up so
we're not necessarily looking for these
catalysts yet there are also stocks that
have extremely low average volume but
high nu reactive volume and so the
minimum you're gonna want to set is a
hundred thousand but for this step I'll
start with one million in volume just to
make it a little bit more simple we can
now scan through the list and find
stocks that look interesting to us my
favorite has always been biotech related
but there are many other opportunities
for us what we're looking for our stocks
that perhaps are in a volatile sector
and also have just taken a massive hit
or inversive Lee had a massive green day
I don't mean the band it's no secret
that many of the penny stocks that have
massive green days tend to have massive
red days after it if you just follow
stocks for say three weeks you'll notice
this trend adversely there are also a
fair amount of stocks that tend to have
massive bright days and then massive
green days after although these are less
common as penny stocks as a whole or
biased downwards in the long run most of
them fail ultimately because their
shitty companies but if you organize it
by the biggest winners or losers you can
then filter and see which stocks may or
may not fit the criteria that we are
looking for and then scan through them
well start with NB RV now NB RV was an
FDA loser earlier this week and we'll go
ahead and check it out MB RV had a
morning panic we saw the sell-off in
price strength decreased to oversold and
if you're making a scam in the morning
you would be aware of this but sensory
or scanning now we can write this down
and look more into it later to see if it
is a reoccurring pattern and then we can
use it to our advantage let's take a
look at TR V and now PR VN has a pattern
of being nonchalant and then rapidly
rising entry day it does this over and
over again that means they just by
eyeballing this we can add this to the
rough draft watchlist that I mentioned
early
and again the point of the rough draft
watchlist is just to find penny stocks
that have a history of massive intraday
movement and then later we can go back
and trace through the list of tickers to
find out what caused the movement in a
attempt to figure if we can time that
again I'll show one more example we'll
take a look at yr IV y our IV went up
from 70 cents to 193 back in early April
we see that movement happen intraday and
we see many other times where it has
moved massively into day as well if we
pull up the intraday chart we can see
your rib is open to a bit of a morning
panic this again is when stocks tend to
crash in the mornings as people worry
that the stock is going to lose more of
its value this is excellent because if
we can identify stocks that are
susceptible to morning panics then we
can buy in at the discount and ride the
price strength over the SMA line now
again we're not just buying at the
discount though because it could just
keep going down what we're doing is
we're noticing the morning panic and
then when it starts to have a
confirmation or when it starts to form a
confirmation that's when we're buying in
because we want a confirmation that it
is going to uptrend but back to the
rough draft for watchlist so once you've
gone through about 20 or 30 of these
tickers and you've picked out about 10
to 15 of them that you're interested in
you can then do more due diligence and
look more into them and we're gonna talk
about that in a second if you're
scanning for morning panics though when
you're doing that in the morning odds
are very strong that you're not going to
have the time to do any more due
diligence so that means that you're
going to have to skip the fundamental
step I do want to go through one more
method that you could use to find penny
stocks that are trainable so the other
way that I scan for stocks and I did
this before every month now I do it a
couple weeks before every month because
I make taught penny stock videos and
what I've been using lately is the
biopharma catalyst website I'm not
sponsored by them you don't have to buy
anything from their website all of the
information is free and available for
you but for catalyst specifically as I
mentioned earlier my favorite way to
approach this is to find stocks that
have FDA approvals and face trial data
releases this is almost guaranteed to
provide price action that we need to
train off of and it's actually really
easy to find out and they usually
provide exact dates that those events
will be happening I'll put a link to the
website in the description below but you
can scan through and if there's
something that you don't understand what
it means you could just go to the
glossary that they have on their PDUFA
those are the ones that are in that last
stage of the phase trial if they get the
decision on PDUFA that's that's an FDA
approval so the ones that they don't
actually say FDA approval says PDUFA
bootiful but that's basically what it is
but it's pretty simple though you
have to go to the list and then you
could filter it by category so by this
point you should have a basic
understanding of what opportunities are
available to you as well as how to find
them the next step is ranking them based
on trade ability I don't know the trade
ability is a real word but doesn't
matter because we need to rank them by
trade ability this is important because
at any given point there are many
opportunities but we don't want to waste
our time on subpar opportunities when
there could potentially be better
opportunities around thus this is the
stage where you analyze the stocks on
your rough draft watchlist and narrow
down the best opportunities so that you
could focus your time and attention to
those this means figuring out which one
has the easiest pattern which has the
most upward potential which has a solid
news catalyst which has a previous
pattern confirmation and which one has a
general uptrend etc etc etc you can then
combine these together to see which
trade has the highest trade ability
ranking for you and as one method to
reign trainability you may want to look
into the fundamentals this is especially
true with news plays and FDA results now
a penny stock fundamentals are usually
not great or else they wouldn't be penny
stocks these are sick dogs make no
mistake the key is figured out which one
has the highest probability of
convincing people that they aren't sick
dogs as we know the value of companies
in the short run is largely dictated by
the opinions of the masses and companies
can often be great at controlling the
opinions while behind the scenes they
are actually being burnt at the stake so
to determine whether or not a stock is a
sick dog you can pull up the balance
sheets and/or SEC filings if I wanted to
look at your ribs SEC filings I can go
to Europe's Nasdaq sub section hit 10 Q
and then scroll through you probably
just Google SEC filings - if you want to
skip that step but once you start
scrolling through a bunch of different
penny stock SEC filings you start
noticing which companies are more liquid
than others start getting a scale of
what's considered good and what's
considered bad and which companies are
more liquid than others like you
probably go on for a couple hours on the
subject of SEC filings but here's what
I'll say in a short sweet and simplified
way focus on dilution liabilities assets
and of course cash on hand SEC filings
are perhaps my least favorite part of
trading penny stocks because frankly
they are dry and boring but the idea
behind it is that it allows us to get a
better feel for the financial health of
the company now most of the balance
sheets are available without looking at
the SEC filings but I like to use the
balance sheets on here on the SEC
filings
because everything is put together and
you know it's accurate because this is
what was submitted to the SEC otherwise
you don't really know it could be
mistakes with SEC filing - but it's lot
less likely another thing that I do is
literally find me address of company
locations and then Google Streetview
searches I mentioned this in an earlier
video but but you will find that a lot
of penny stocks are based out of really
sketchy locations if you think that you
are buying the next Apple there's a lot
of people that fall into these big
stories that penny stocks have but if
you think you're buying the next Apple
and you pull up the location on Street
View and you find that it's a shack with
the CEO living in an RV next to it then
you are probably being duped now this
example isn't actually random this was
an actual company that spiked multiple
hundred percentage points a few years
ago and everyone was wondering why it
later crashed and it turns out there was
no underlying assets and the whole thing
was a big pump and dump so be wary of
companies that have sketchy locations
such as this one in the middle of
nowhere or perhaps in a random strip
mall outside Tampa yes a lot of great
big successful companies started out
very small but penny stocks are more
likely to decrease over the long run so
it's kind of like playing the lottery if
you think that you're one penny stock is
going to be the one to hit it big ok
well in summary why is it that you would
want to trade penny stocks they're very
speculative there's a lot going on well
that is a personal preference thing but
whenever I consider approaching any
market I ask myself well participating
in this market provide me with a decent
probability that I'll be able to make
money if I learn everything there is to
know if the answer is yes then I'll
enter the market and learn everything
that there is to know for everything
that I need to know in order to start
participating and pushing the
probability in my favor
that being said penny stocks aren't the
easiest thing to trade I've always
recommended that people start with
mid-tier or even large cap stocks or
perhaps ETFs when they're just getting
started but penny stocks do offer a
massive amount of upward potential and
it's one of the only areas of the stock
market where you can see fairly fairly
common opportunities with a hundred
percent or more an upward potential now
you're not going to catch all of the
move or maybe not even 60% of the move
but if you were just to catch 40% of the
move I mean that's a pretty good move
right there
penny stocks tend to spur a lot of
people in because they see these
promises of huge returns but these
things never come easy and they never
come quickly like the rest of trading
your financial results will be based on
how consistent and how dedicated you are
to the learning process and how much
experience you accumulate in the SEC
but when approached correctly Penny
Stocks can be one of the most
exhilarating and rewarding niches within
the stock market my recommendation is to
add penny stocks to your training
inventory but to only make them one part
of your trading inventory you should
also be trading leveraged etfs you
should be trading larger cap stocks you
should be trading micro cap stocks we
traded mid-tier stocks anything with
opportunities and volatility that we
need to trade off it then also have the
risk vs. reward in our favor anyways I
hope this video is helpful folks if you
have any questions don't forget to
comment below or reach out to us on the
Zipp trader Circle Facebook group we
also have a discord chat now which you
could join by going to the Facebook
group and clicking the top link in the
description as another resource we also
have a trading tutorials playlist which
can be very helpful for a lot of new
traders so if you've completely lost you
could start there and then work your way
up anyways have a great day folks and
I'll see you in the next video