Today we’re going to talk about how you can build a penny stock watchlist.
We’ve been talking a little bit more about penny stocks lately, and that is because we have an upcoming course coming out called Penny Stock Profits.
This course is packed with a lot of strategies to trading penny stocks the right way. Many people just struggle with trading penny stocks because they don’t know and understand the way penny stocks move, act, and behave. It’s completely different.
Also, there is a Penny Stocks Case Studies
Trading Penny Stocks
People most people do is they are using their full account. They trade penny stocks, and maybe they have $10,000. And they put 100% of their money into the penny stock.
You could look at it as a triangle. But if I break this triangle apart, you have to remember that some of that money should be long-term investments. Like dividends, like an excellent stock. It could be like a Starbucks. It could be like a McDonald’s, a Walmart, P&G, Johnson & Johnson, or Microsoft.
It could be something long-term, right. Something that you don’t mind holding for 10 or 20 years.
Other trades would be 25% of your investments. Maybe those are medium-term trades. It could be swing trades. It could be option trades that you hold 30, 60, 90 days. And the penny stocks are the speculative part of the portfolio. And that’s the whole point behind trading penny stock. It’s really in the speculative part.
There’s nothing wrong with trading penny stocks. Some people say that they hate trading penny stocks. If you hate trading penny stocks, it’s probably because you’re trying to trade it in a big way and using your full portfolio, whereas the smarter approach is to trade it when you’re allocating the right amount of cash and capital.
Be very careful as you get into this.
How Do We Build a Watchlist for Penny Stocks
You have to fine-tune yourself as you get into building a watchlist.
There’s a couple of issues with penny stocks.
You need to be very careful when you’re building your watchlist. The number one thing is not to get stuck. You don’t want to get stuck, and if you get stuck, that’s a problem.
I want to watch my volume, and I want to make sure that the stock trades a good amount of volume. That’s one of the requirements.
The other thing is the penny stock definition or the word penny stock. Stocks less than a dollar.
But that definition has evolved. Now we’re talking really about cheap stocks. It’s not just stocks that are 50 cents, 20 cents. What you’re looking at are stocks that you could trade either for the long side or the short side. And you’re looking for stocks probably between $3 and $15 a share. That’s because $15 ones you can short and $3, $4 ones maybe you go long.
That’s a good starting point. And then another thing is clean charts. That’s another thing that you may want to look at. That’s a basic way to get yourself started into building a watchlist.
How to Set This Up on Trading Platform TC2000
I want to share with you how to set this up on a trading platform. This is TC 2000.
You could use any broker you want as well. It’s okay.
We will scan US stocks.
And now I’m going to set a new condition.
In this case, we’ll do the price.
You can see right there there’s the price. I’ll set the price. We want between about $3 and $15.
Let’s just show you what this looks like. Start the scan.
You can see there’s my scan, and in this case, I still got about 1500 stocks.
That’s still quite a lot. You could add to that scan. Let’s say a condition volume.
And with volume, I could say greater than let’s zoom in on here greater than 150,000. We are getting rid of the junk. That’s because we’re trying to get rid of that junk.
We narrowed that down to 357 on our watch list.
That all of a sudden is a lot better.
I could sort it by price. Now I got the $3 stocks right here. And now what you can do is look for clean things, clean charts. You could find something that is dirty, and I’ll show you what a messy chart maybe looks like.
Meaning there’s no pattern. With this one, there’s a pattern.
I could pull out my program here and draw a line of support and draw lines of resistance.
It’s a clean chart. There are patterns; there’s some support; there’s some resistance. I’m not saying it’s got to go up. I’m just saying it’s a clean chart.
Choosing Stocks That You Like
I have my basic list, and now I can start favoriting these – the ones I like. You can flag them however you want. You could create a new excel sheet or a file here if you want.
You could take this software and choose stocks that you like.
That way, you can make a list, and then you can put that in the new watchlist.
The other approach is to copy this to my favorites.
They have things like copy to my favorites, flag things, and so on.
This is the basic starting point for creating a watchlist for trading penny stocks.
You take this list of 357 stocks, and now you see what’s catching my eye.
Take a look at this stock – GoPro.
It hasn’t been doing anything, so chances are it’s not going to go to the upside. And it’s probably not a good stock to short because it’s already at low prices.
I mean how low $3 stock goes, it can go lower, but not that much lower.
I’d rather short like the $15 stock or something like that. I probably wouldn’t even put that on my watch list.
Something like this, maybe it’s starting to climb here.
I could put it on my list and check back on it every year or something like that.
Here’s a dirty chart.
You can see right there it just continues to split. That’s what they’re doing right here, splitting to try and keep the price propped up or not do too bad.
But it’s a dirty chart.
What you’re doing now is just filtering through the junk, and eventually, you might get something like this that catches your eye.
This one’s starting to break out, and the volume is picking up. And I’ll put this on my list, and it could be a more potential candidate to trade. And that’s the better approach to building your watchlist when it comes to trading penny stocks.
Here’s another one that’s breaking out.
You could see here’s my line of resistance. There it is, the volume is picking up. It’s been digesting for like two years, and maybe it’s time – it’ll move higher.
That’s what you want to do when you’re looking to build a watchlist. You don’t want to get something that’s low-volume.
If you do, you could get stuck. You don’t want to go super cheap like dollar stocks because then there’s not much to trade. And you want clean charts. That’s ultimately what you want.
Here’re Some Nasty Things
We’re going to reset our scan parameters.
From $0 to $15 and let’s just do a scan. And you’ll see some of these stocks that are penny stocks are 2 cents. Look at these charts. They’re nasty. They’re dirty, and they don’t look good. There’s no pattern behind it.
They’re 4 cents, and then they get halted, or they’re delisted, That’s the issue with penny stocks. If you’re trading ones that get halted, delisted, or there are huge problems, you’re not going to make money. You’re going to lose money, and you’re going to be stuck.
That’s my whole point. Learn the right way and to do that you should check out the course that we have when it comes to trading penny stocks >>> Penny Stock Profits Course AND Penny Stock Case Studies
There we go in an overview a lot of excellent penny stock charts. Charts that you could use to trade for the long side or the short side as well.
Check out that course if you’re serious about trading penny stocks or smaller and cheaper price stocks.