So where do I start to find the Hottest 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. Finding good penny stocks to buy is imperitive for beginners to have success.
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 long term 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.
Our Hot Penny Stocks:
Other Services Covering the Hottest Penny Stocks:
-See our Penny Stock Pick page...
How else can I find the Hottest Penny Stocks:
1. Find out what everyone else is talking about on the penny stock forums. You can use forums and message boards to see what stocks are getting the most hype. Also check out CEO Central for live and recorded full interviews with the CEOs of some of the hottest penny stocks. From there you can narrow down to the one that looks best. Remember you want to find a stock that is hot, but not one that has already run 200%+... You also don't want to chase the first stock you see move until you see a continued demand for shares, and corresponding price movement.
2. Learn how to find hot stocks using Technical Analysis. Using 'TA' you can find stocks that are on the verge of "breaking out", play trading channels, or accumulate cheap shares at the lows. Technical analysis is a great method to find stocks that are about to become the "Hottest Penny Stocks", but remember there is almost always a hype factor involved in the biggest stock runs. We suggest finding stocks in good technical condition, that also have a decent following, or history of a following. Check the message boards and look back to see what has happened in the past.
3. Find stocks that are undervalued on a fundamental basis. When we talk about fundamentals we're talking about actual assets the company has, it's potential, revenue strength, profit margin, and competition just to name a few factors. Many penny stocks are undervalued, and many are extremely overvalued. When you're looking for the hottest penny stocks try to find the ones that are undervalued. Ideally, you want to find the ones with a 'Market Cap' that is significantly below what you can determine as a fair value for the company. This is not an easy task, especially for beginners, but with experience you will have a better feeling for it. Again, market cap and fair value are vague and often disregarded factors in the penny stock market, but they certainly do have some meaning in many scenarios. Check out our article on Penny Stocks to Buy for some help getting started.
What is Technical Analysis?
-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 analysis, the basis 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. Hands down, the best tool/service to scan and filter the penny stock market is EquityFeed. Check out our Full Review of EquityFeed to see what this system is capable of.
Once you find some interesting stocks with your scan, then it is time to check out their 'charts'.
What are some Stock Scanning Tools?
-Arguably the best service a trader can use to find the hottest penny stocks is EquityFeed. A subscription to EquityFeed's Microcap service gets you pro-level real time charts, level II quotes, active stock listings, screening and scanning utilities, pattern matching and much more. The price of the subscription is substantial, but the advantage it gives you over the average trader greatly increases your chances of success, and your profits. We use EquityFeed at Penny Stock Nation and we easily make back the subscription price with profits. Check out our Full Review of EquityFeed.
-Another good 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. The main disadvantage of this tool is it is not real time, and not streaming. This is fine for slow trading strategies, but won't give you the 'quick-jump' advantage over other traders.
-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 great tool for finding stocks that match a particular chart pattern (e.g. cup and handle, double bottom, etc). This is a free utility for all TDAmeritrade clients. Also 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
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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