Choosing Cheap Penny Stocks

Day traders are often looking for cheap penny stocks to buy and sell for quick profit. Penny stocks by definition in the U.S. are any company shares that sell for less than $5.00 per common share. Sometimes the name penny stocks causes some confusion so we wanted to clear that up right off the bat.

Where to Find Cheap Penny Stocks

Cheap penny stocks are available practically anywhere but getting good and cheap penny stocks is not always easy to do. You must be very careful as the prices of these stocks tend to fluctuate greatly. There is opportunity for great gains but also a good chance of big losses as well. Whether you end up on the winning or losing side of the equation often depends on where you’re getting your information.

What to Look at With Cheap Penny Stocks

When deciding on cheap penny stocks it is always a good idea to look at a few significant factors before you invest. One of these factors might be the recent trading volume. That is to say how many of the cheap penny stocks are being bought and sold. Another factor might be the trend in the pricing of the stock. Just because a stock’s price is trending in one direction doesn’t necessarily mean that trend will continue but it should definitely be considered. A third factor – and one that we’ll look at a little more closely – is insider trading activity.

Cheap Penny Stocks and Corporate Insiders

While the corporate insiders managing cheap penny stocks companies are not nearly as stringently regulated as their blue chip counterparts, many of them still choose to file their insider trades with the SEC. For savvy investors looking to improve their odds of success trading cheap penny stocks, this insider trading data can be a virtual goldmine.

When insiders begin buying or selling their own company shares on the open market, they are often sending out very strong trading signals. These signals could be telling the general public how they feel about the future of their company and where they believe the stock price is headed. As a very simple example, there is any number of reasons for an insider to sell his or her company’s cheap penny stocks but there is only one reason to buy. He or she feels that the price of the stock is going to rise.

If you’re evaluating a variety of cheap penny stocks wouldn’t you want to know this information? Of course, you would. Subscribe to the free service at to find cheap penny stocks opportunities and to get on the inside with your investing.


Reported on Sep 21, 2011

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