Finding penny stocks to watch is a very important part of being a successful, profitable day trader. Day traders make their nut by trading in small-cap stocks that big institutional investors do not want to touch. Penny stocks to watch are ones that are ready to make big moves in the course of a trading day and provide day traders opportunity to make profits.
When you trade penny stocks, one of the best strategies to attempt is the gap & go strategy. That is a system where you search for gappers in the morning before trading begins. Gappers stem from pre-market trading, where certain entities get to make moves on stocks before the bell rings. Gappers are stocks that have share prices gapping up over the closing price at the end of the previous day.
One of the keys to finding good penny stock gappers is finding out what catalyst might be acting to drive up that pre-market price. A breaking news catalyst might be a company’s earnings report or news of a new product coming out that could be a boost for the bottom line. When you combine that information with a float low enough that the entire amount of a company’s shares might be traded in the course of a trading day, you have the potential for a profitable gapper.
How to enter the stock, where to place your stop-loss and how to read the candles are all part of the strategy too. Where to learn all that stuff is different story. Warrior Trading is a well-respected day trading education site that can provide aspiring day traders with the best online classes for day trading, a chat room full of experience traders to learn from and a paper trading platform that allows you practice trading at the speed of the market with little risk.
Ninety percent of day traders lose money. That is an accepted fact. But the 10% that do make money, do so because they took the time to educate themselves on profitable strategies and risk management protocols.
Risk management is at the heart of day trading. When you are searching for hot penny stocks to watch , you want to be assured that you can trade without losing large sums of money with one or 2 trades. Risk management is the best way to make sure that your profit/loss ratio stays in the black for weeks and months at a time. That is how you become a profitable day trader.
One of the best ways to learn proper risk management is to spend time in a simulated trading environment. Simulated trading is where you obtain thousands of dollars in virtual currency from a trading platform and make trades in a system that mimics the speed, execution and vagaries of the real stock market. It is practice at market speed. That is the only way to understand what it feels like to make trades without risking actual hard cash.
Warrior Trading has a paper trading platform, a day trading chat room with veteran instructors present, calling out trades and market news, as well as a host of online classes that educate aspiring and intermediate day traders.