Penny Stocks To Watch and How to Find Them

If you are going to succeed in trading penny stocks, then you have got to learn how to find the right penny stocks to watch. This certainly goes without saying. But as we all know, saying and doing are two entirely different things, aren’t they?

Of course the first place that you must begin is by doing your homework. If you want to accomplish any level of success while investing in penny stocks, then doing proper research is critical. The biggest reason for doing this is the most penny stocks offered out there in the markets are lousy and crappy, and they are itching to lose your money for you.  Can you think of a better reason to be particular in accumulating the right penny stocks to watch?

Researching to Find the Right Penny Stocks to Watch

Consider yourself lucky for being able to trade stocks in today’s environment. This is because there are so many information sources out there for you to utilize. This just wasn’t the case only a few years ago. It used to be there was very little data available about penny stocks. In many ways it truly was a crapshoot.

On the other hand, you could argue that now there is too much information – making it difficult to sift through to find what you need. Let me add something else to that notion. A lot of that information is unreliable too. Thus, you must be careful where you find your research data. But if you just use some common sense, you will definitely know the difference.

Penny stock research begins with focusing on the right companies and evaluating their balance sheet – among other things.  When you take the time to do this, you are performing proper “due diligence”, according to the pundits.  But when you know the financials of a company inside and out, then you will form the right opinion of them. Do this with a number of companies, and then you will be able to compare them and immediately know which ones are candidates for making a big stock move.  When you do this over and over, you become more efficient and will become accustomed to knowing the reliability of data. The smart penny stock trader will not invest his hard earned money until the time is right for finding good penny stocks to watch.

Knowing Where to Find Penny Stock Data

As with anything in our society, if we want reliable penny stock data, then we first must go to reliable places. As we said earlier, most of the data out there about penny stocks are totally wrong and misleading. I mentioned this before, but I didn’t say why.

The reason is because of the many scams running out there which promote specific stocks for people to buy. When the stock is bought driving up the price, then the promoters dump their shares for a quick profit. This is why you should avoid penny stock newsletters – as this is one of their favorite ways to promote their losing penny stocks.

We recommend that you look to reputable and familiar places for your penny stock information. Here are the places we like to use:

Yahoo Finance – They provide many things pertaining to the financial markets. The site offers great stock news, earning reports, financial sheets, stock charts, and even a pretty stock screener. Their site is used by millions of investors because they are reliable.

MarketWatch – These people are like Yahoo Finance, they provide many things to the investor. However, here’s the big difference between the two. Yahoo is into many things, MarketWatch focuses only on finance.

Google Finance – They provide a lot of what Yahoo does, but does not offer quite as much. The data is reliable though.

Investopedia – This site is exactly what the name implies, it’s an encyclopedia for investing. Here you will find the answer to any question you will have about investing, the different types of markets, etc. They also provide great training which I recommend highly. If you trade the markets, then you must bookmark this site.

Assembling Your List of Penny Stocks

Now after looking at the different stock data that is available, and understanding the criteria that you stock must need, you are now ready to use a stock screener. A stock screener is basically a search tool that searches only stocks.

When you use a stock screener, you are offered several different settings for stock criteria. You dial up the parameters you are looking for in a penny stock, and then you hit search. Do not go looking for a penny stock screener, because there are none. Instead, you enter in the price ranges that are typical for penny stocks. The good news is that most of the sites that we recommended earlier have stock screeners for you to use.

After you plug in your desired stock parameters into the screener, then it will provide the first draft list of your penny stocks to watch. You then take these penny stocks and then begin comparing them against one another. This will trim your list do even more. You want to keep doing this until you have a list of a dozen or stocks to choose from.

Knowing When to Buy Your Penny Stocks

Now that you have your list of penny stocks to watch, your next step is to examine the current price action of each of those stocks. And the only place you can view a stock’s price action is on penny stocks charts. This will tell you which ones are most likely ready to buy.

This discussion will not cover stock chart patterns, but I will say that you will be only interested in those which are trending upward, have reached new highs or have shown upward spikes and are resting at the moment. Those stocks that are showing you downtrends should be removed from your list of penny stocks to buy because you should never buy a downward trending stock of any kind. That would be like trying to catch a falling knife.

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