Trade Penny Stocks – Swing Trading Strategy

How to trade penny stocks using the swing trading strategy. Why do you want to swing trade penny stocks? Because many profitable penny stocks are swing traded base on the trend of the penny stocks. These penny stocks are traded based on a one to five day trading patterns.

Investing in a stock and holding on to it for a long time might be a good strategy. However, you will not maximize you profit potential. By following the trend, you can maximize your profit potential from all the stock movements. Day trading penny stocks might work if you can have enough capital to move a stock and then benefit from the price change quickly enough to take profits.

When you swing trade penny stocks, you want to pick stocks with large volume. Make sure there is enough volume so that you can in and out of that stock quickly. Look for stocks with daily volume that is 20 times larger than that of your position.

Here are other things you want to look out for. Look for stocks with less than 50 million shares is a good sign. If the stock has a history of reverse splits is also a good sign.

To be a successful at swing trading penny stocks, you must know how to read a chart. has a good tutorial on how to read a chart and understanding trading patterns and indicators. It would be very difficult to make any money unless you know how to interpret a stock chart. It is a very important tool for traders.

Never be rushed into buying a stock. Never buy a stock based on rumors. Do your own research and due diligence. There are plenty of opportunities waiting for you. You just have to do your research and find the right one.

Do not buy any stocks that are under 5 cents. Most likely the company is headed for bankruptcy.

Do not buy any over the counter bulletin board (OTCBB) and pink sheet stocks that are headquartered in Las Vegas, Canada, San Diego, Florida, Mexico, or New Orleans. Majority of them are garbage.

Do not diversify your stocks if you have limited amount of money to invest in penny stocks. Just select 2 or 3 stocks with good potential to trade with.

You must have an entry and an exit strategy before you trade penny stocks. Keep to your entry and exit strategy and do not let your emotions trade for you. When your emotions take over your reasoning is when you will probably make a costly mistake.

Always trade with and not against the trend of the market. Sell into an up trend and buy into a down trend. Never hold on to a losing trade for a long time. And do not try to make up for the previous loss on the next trade.