So where do I start to find hot penny stocks?
-When starting your search for hot penny stocks, ideally you need to find a reputable and real company. Often times penny players can make money on fake, scam based companies, but the risk in trading these stocks is sky-high. By finding a company with good intentions, and a real product that has real demand, the risk of losing your investment is greatly reduced.
If you are a beginner to investing, just finding such a company can be a seemingly impossible task. Without knowing where to look, or what exactly to look for, there is no chance of success. In this case, you are most likely better off to examine the research and follow the guidance of an experienced penny stock pick service, or newsletter. There are many sites out there that provide penny stock picks, including this one. Here at TheThirdDimension.net, our number one goal is to provide our visitors with reports and evaluations of REAL companies.
Our Featured Hot Penny Stocks:
What is Technical Trading?
-To start trading without the advice or research of experts... finding hot penny stocks, researching them, and determining where to buy and sell are all tasks that will be on your shoulders. The next best place to start your venture is in the realm of technical trading.
To find the stocks that are likely to move, many traders run what is called a 'scan'. A scan is basically a filtered search of all stocks. One can set filters to find stocks with abnormally high volume, price movement, or any combination of a multitude of other indicators that can identify hot penny stocks. When they get a list of results, then it is time to check out the stock's 'chart'.
What are some Stock Scanning Tools?
-One of the best utilities a trader can use to find hot stocks is MicrocapFeed. A subscription to this gets you charts, Level 2 quotes, active stock listings, screening and scanning utilities and much more.
-Another great tool to use is StockCharts.com's Stock Scan page, featuring a listing of many common predefined scans with links to qualifying stocks, as well as the ability to create your own scans.
-If you have TDAmeritrade®, you can use their screening utilities, including the new Pattern Matcher™ tool built into the Command Center 2.0. This is an awesome tool for finding stocks that match a particular chart pattern (ie- cup and handle, double bottom, etc). This is a free utility for all TDAmeritrade clients. Also very useful is the Advanced Analyzer, a desktop utility allowing selection of 100 preset conditions for screening stocks. This is free for all TDAmeritrade Apex clients.
-You can also screen stocks with a basic screener from one of the websites below. These allow you to define market sector, price range, PE ratio, volatility, and much more. Most are geared for small to large- cap stocks however, and may not be best suited to finding hot penny stocks.
-Yahoo Stock Screener
-MSN Stock Screener
-Google Stock Screener
-SmallCapCenter Screener
What is a 'chart'?
-A stock chart is a graphical representation of that stock's trade data, collected every minute of every day. A very basic chart will show the price of the stock on the Y-axis vs. time on the X-axis. Along with this there may be an 'indicator' or two. An indicator takes the input data and outputs a result based on a specific mathematical operation. Indicators allow chart readers to gain further insight into the trading that is occurring. There are tons of different indicators, but even a basic understanding of the popular ones will be a big help.
To learn more about charts, check out our Strategy Page on Technical Analysis. By knowing the basics of charting, or 'technical analysis', you will be able to narrow down your scan by another factor. Then you can focus on the 'fundamentals' of the stock, to find undervalued stocks.
What are 'fundamentals'?
-Fundamentals can include a company's financial reports, as well as non-financial information such as growth estimates of the demand for sold products and competing products. Investors will also look into new regulations or demographic changes, and economy-wide changes.
When examining financial reports investors will look for improvements in earnings per share, top line revenue, reduction of expenses, cash on hand, and several other variables. The disadvantage with many penny stocks, pink sheets being the worst, is that financial reports may not even be published by the company. Also, even if they are, unless they are audited by a legitimate third party you are taking they company's word as to their accuracy. To learn more about finding and evaluating financial statements, please read this article.
What's Next?
Once you have filtered down to the stocks with the best fundamental and technical analysis results, you will want to do one last investigation to determine the 'share structure'.
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