Folks often ask me why being me practical and charming trader that I am that I would even bother including penny stocks in my overall trading inventory. Well, frankly, it's because there's a decent amount of opportunities in these, and that's usually irregardless of how the overall market is performing. As we know, a slow market can creep into a lot of different sectors, but penny stocks. they tend to move wherever they want.

Now with that being said, I'll be the first to tell you that penny stocks are not easy to trade. But if you do it right, they are an important part of a diversified approach to trading. So by the end of this video, you will have a complete understanding of what you need to do in order to start successfully trading penny stocks. We're going to be going through a step-by-step guide starting with what opportunities are available to us, how to find these opportunities, how to analyze their price action, look at SEC filings, break down news, catalysts, and most importantly, rank their trade ability.

What makes one penny stock more tradable than another penny stock? You will also understand where the best entry and exit points are, and how to predict profitability over many trades instead of just one trade. This is going to be an information packed video. So brace yourselves and as always, the only thing I ask of you in return for it is that you hit that beautiful and ravishing like button. And also don't forget to subscribe if you see value in the following video.

So most penny stock opportunities come in several different categories. First, you have the Morning panics, you have the breakouts, you have the push backs from Up trends, and last, you have the Catalyst News plays. Morning Panics Happened when a stock opens in. there is an irrational, widespread selling it market open, The stock price dips, everyone panics, and they sell more, which causes the stock price to go down even further.

Irrationality Of The Stock Market 101 This, of course happens in a lot of sectors of the market, but it tends to be more poignant with smaller caps. The key is that if this isn't caused by a bad news catalyst, and if there is a previous pattern of the stock having morning panics than recovering, then that means that we could take advantage of the discount, buy in conformation and then ride to recovery up and over the SMA line. As we know, price action moving close to the SMA line is a sign of price weakening and price action moving farther. Well, that's a sign of price strengthening.

The key with these plays is buying into confirmation and selling out at validation. You won't catch the top with these, but oftentimes you will get a huge chunk of it if you play it correctly. The next type of Breakouts: These are the stocks that are making higher highs. Higher highs can bring in a bunch of do buyers excited to buy into the hype.

We call these the sheep, but two sheep basically buy in and allow the price to go higher and higher. Brain and more and more sheep and tell. Eventually people just think the stock is way too overvalued and then it comes crashing down. To add to that, shorts tend to like to start piling in after breakouts from higher highs.

Breaks of resistance in these thoughts, which means if we're following level two, we could see if there's a wall of buyer's or seller's and if there's a big wall of buyers, the stock could then be more prone to a short squeeze, which would lead to a more rapid increase. Con: With breakouts, Those that you're going to need to distinguish between a breakout and a genuinely overbought position. We'll talk more about that later, but that leads me to the next one. These are stocks that are becoming oversold.

They're having a general push back from an uptrend. For example, Yuma establishes higher highs and then has a pattern of dipping below the SMA line, offering us entry points. We can then plan out to take our entry points at the push backs from the uptrend. We can also take advantage of buying in at higher highs, but the push back from an uptrend entry point would offer us more upward potential overall.

And the last one, perhaps the most consistent and lucrative of them, is Biotech FDA approvals and phase data releases. Specific examples include ADM A and SC YX Both of these were on my top penny stocks videos and both of these spiked in the triple digits. FDA Approvals and phase data releases are all public knowledge assessable on sites like Biopharma Catalyst. I'll put a link in the description, but the key is that last stage FDA approvals have an 80% chance of getting past, so if we use the resources available to us to understand the exact dates that these are coming out, you delve more into them.

Do our due diligence and figure out formal hypotheses on what's going to happen, but we're not just guessing whether or not it's going to be approved, we're making a plan saying okay, well I think it's going to get approved, but we're going to make a plan regardless of whether it gets approved or what happens if it doesn't get approved. there's been. No matter what happens, we follow that plan to a tee. We plan to profit off of either fluctuation, but this does require due diligence.

Like I said earlier I actually make a video every month on the top penny stocks in the Biotech sector and what I do in these videos is I go through each of the phase data releases as well as FDA approval dates and I put them all in a list and then I figure out which ones I think are going to be the most likely to provide the price action that we need to trade off of them and then about my due diligence in terms of whether or not I think they're going to be passed. And of course, you could check that out to see an example on how I have to do the due diligence on those. And if you track back, every single stock that I've talked about except for maybe one or two has provided the price action that we need to trade off of. They haven't all gotten approved, but they have all provided price action that we need to trade off of.

And what do I mean by price action? Well, price action is. it's moving. It's moving. It's providing us confirmation and validation points, entry and exit points.

It's providing us discounted positions. It's providing us with upward potential. And the reason that I'm almost 100% correct on predicting volatility with those types of videos is not because I'm a miracle Wonder gnome, but rather because the companies literally tell you the exact date at which price changing events will occur. and the next step is how to find these puppies.

So what I'll usually do before scanning for stocks is I'll have it literally literal notepad and I'll write down a rough draft watch list. That's it. My criteria that I'm going to want to do more due diligence into after I go through the scanning process. Okay, so the first way of scanning.

let's talk about how to scan for penny stocks in all sectors that could potentially meet your criteria for finding breakouts or push backs from Dips. The first way to do this, and this is just the way that I do it is that I'll use Ganner of my choice. Sometimes that's thinkorswim, sometimes that's Weeble. Today, we're going to use Fin Vis since this should be accessible to you regardless of the country that you are in I Know that we have a lot of people that are in different countries and don't have access to some of the same brokers that I use.

So I'm hoping that this will solve that problem. Fin V should be available regardless of the country that you're in except for maybe China I Know they blocked a lot of American websites, but you head over to the screener and then you can perform a technical search. The first thing is to set a high level of beta. This is basically a measure of a stock's overall volatility in relation to the overall market.

If beta is 1, that means it moves exactly the same as the market. If it's under 1, that means it moves less than the market, and if it is over 1, that means it is moving faster than the market. Since we are looking for volatility, which one do you think that we're going to use, We of course want something that is moving faster than the market. So at a minimum we want something over 1.

But let's scan 4 over 2 because that will be a lot more volatile and will find more setups. There's also an option to select for volatility, but I've never done that. This is just the specifications that worked for me, but mess around with the specifications until you find that perfect fit that special someone is out there for. Next, we want to set it to show us only penny stocks.

Now, the SEC defines a penny stock as any stock valued at under five dollars. So I'll set this to under five dollars. If you were one of the penny stock purists that won't consider anything over one dollar to be an actual penny stock, that's fine. You could set it to under one dollar.

That's up to you, but you should know that a lot of opportunities are in the one to five dollar range and those are technically penny stocks as well. The next step is setting an average volume filter. There's a few different ways that you can approach this, but the lowest you want to go is about a hundred thousand. There are exceptions to this.

As I've said before, when it comes to needs catalysts, these catalysts can bring a lot more people into the market which will then bring up volume. But for this step, we're just scanning for stocks that have set up so we're not necessarily looking for these catalysts yet. There are also stocks that have extremely low average volume but high nu reactive volume and so the minimum you're gonna want to set is a hundred thousand. But for this step, I'll start with one million in volume.

Just to make it a little bit more simple, we can now scan through the list and find stocks that look interesting to us. My favorite has always been biotech related, but there are many other opportunities for us what we're looking for: Our stocks that perhaps are in a volatile sector and also have just taken a massive hit or inversive. Lee Had a massive green day I Don't mean the band. It's no secret that many of the penny stocks that have massive green days tend to have massive red days after it.

If you just follow stocks for say, three weeks, you'll notice this trend adversely. There are also a fair amount of stocks that tend to have massive bright days and then massive green days after. Although these are less common as penny stocks as a whole or biased downwards in the long run. most of them fail ultimately because their shitty companies.

But if you organize it by the biggest winners or losers, you can then filter and see which stocks may or may not fit the criteria that we are looking for and then scan through them. Well start with NB RV Now NB RV was an FDA loser earlier this week and we'll go ahead and check it out. MB RV Had a morning panic. We saw the sell-off in price, strength decreased to oversold.

and if you're making a scam in the morning, you would be aware of this but sensory or scanning. Now we can write this down and look more into it later to see if it is a reoccurring pattern and then we can use it to our advantage. Let's take a look at TR V and now PR VN has a pattern of being nonchalant and then rapidly rising. entry day.

it does this over and over again. That means they just by eyeballing this. We can add this to the rough Draft Watchlist that I mentioned early and again, the point of the rough Draft Watchlist is just to find penny stocks that have a history of massive intraday movement and then later we can go back and trace through the list of tickers to find out what caused the movement in a attempt to figure if we can time that again. I'll show one more example.

we'll take a look at yr IV y our IV went up from 70 cents to 193 back in early. April We see that movement happen intraday and we see many other times where it has moved massively into day as well. If we pull up the intraday chart, we can see your rib is open to a bit of a morning panic. This again is when stocks tend to crash in the mornings as people worry that the stock is going to lose more of its value.

This is excellent because if we can identify stocks that are susceptible to morning panics, then we can buy in at the discount and ride the price strength over the SMA line. Now again, we're not just buying at the discount though, because it could just keep going down. What we're doing is we're noticing the morning panic and then when it starts to have a confirmation or when it starts to form a confirmation, that's when we're buying in because we want a confirmation that it is going to uptrend. But back to the rough draft for watchlist.

So once you've gone through about 20 or 30 of these tickers and you've picked out about 10 to 15 of them that you're interested in, you can then do more due diligence and look more into them, and we're gonna talk about that in a second. If you're scanning for morning panics though, when you're doing that in the morning, odds are very strong that you're not going to have the time to do any more due diligence. So that means that you're going to have to skip the fundamental step I Do want to go through one more method that you could use to find penny stocks that are trainable. So the other way that I scan for stocks and I did this before every month now I do it a couple weeks before every month because I make taught penny stock videos and what I've been using lately is the Biopharma Catalyst website I'm not sponsored by them.

You don't have to buy anything from their website. all of the information is free and available for you, but for Catalyst specifically. as I mentioned earlier, my favorite way to approach this is to find stocks that have FDA approvals and face trial data releases. This is almost guaranteed to provide price action that we need to train off of and it's actually really easy to find out and they usually provide exact dates that those events will be happening.

I'll put a link to the website in the description below, but you can scan through and if there's something that you don't understand what it means, you could just go to the glossary that they have on their PDUFA those are the ones that are in that last stage of the phase trial. If they get the decision on PDUFA that's that's an FDA approval. So the ones that they don't actually say FDA approval says PDUFA Bootiful. but that's basically what it is.

But it's pretty simple though. You have to go to the list and then you could filter it by category. So by this point you should have a basic understanding of what opportunities are available to you as well as how to find them. The next step is ranking them based on trade ability I don't know the trade ability is a real word but doesn't matter because we need to rank them by trade ability.

This is important because at any given point there are many opportunities, but we don't want to waste our time on subpar opportunities when there could potentially be better opportunities around. Thus, this is the stage where you analyze the stocks on your rough draft watchlist and narrow down the best opportunities so that you could focus your time and attention to those. This means figuring out which one has the easiest pattern which has the most upward potential, which has a solid news catalyst which has a previous pattern confirmation, and which one has a general uptrend, etc etc etc. You can then combine these together to see which trade has the highest trade ability ranking for you and as one method to reign trainability you may want to look into the fundamentals.

This is especially true with news plays and FDA results now a penny stock. Fundamentals are usually not great or else they wouldn't be penny stocks. These are sick dogs. Make no mistake, the key is figured out which one has the highest probability of convincing people that they aren't sick dogs.

As we know, the value of companies in the short run is largely dictated by the opinions of the masses and companies can often be great at controlling the opinions while behind the scenes they are actually being burnt at the stake. So to determine whether or not a stock is a sick dog, you can pull up the balance sheets and/or SEC filings if I wanted to look at your ribs. SEC Filings I can go to Europe's Nasdaq sub section hit 10 Q and then scroll through you probably just Google SEC filings - if you want to skip that step. but once you start scrolling through a bunch of different penny stock SEC filings, you start noticing which companies are more liquid than others, Start getting a scale of what's considered good and what's considered bad and which companies are more liquid than others like.

You probably go on for a couple hours on the subject of SEC filings, but here's what I'll say in a short, sweet and simplified way: focus on dilution, liabilities, assets, and of course cash on hand. SEC filings are perhaps my least favorite part of trading penny stocks because frankly, they are dry and boring. But the idea behind it is that it allows us to get a better feel for the financial health of the company. Now most of the balance sheets are available without looking at the SEC filings, but I like to use the balance sheets on here on the SEC filings because everything is put together and you know it's accurate because this is what was submitted to the SEC Otherwise, you don't really know it could be mistakes with SEC filing - but it's lot less likely.

Another thing that I do is literally find me address of company locations and then Google Streetview searches I mentioned this in an earlier video but but you will find that a lot of penny stocks are based out of really sketchy locations. if you think that you are buying the next Apple There's a lot of people that fall into these big stories that penny stocks have. But if you think you're buying the next Apple and you pull up the location on Street View and you find that it's a shack with the CEO living in an RV next to it, then you are probably being duped. Now, this example isn't actually random.

this was an actual company that spiked multiple hundred percentage points a few years ago and everyone was wondering why it later crashed and it turns out there was no underlying assets and the whole thing was a big pump and dump. So be wary of companies that have sketchy locations such as this one in the middle of nowhere or perhaps in a random strip mall outside. Tampa Yes, a lot of great big successful companies started out very small, but penny stocks are more likely to decrease over the long run. so it's kind of like playing the lottery.

If you think that you're one, penny stock is going to be the one to hit it big. Ok, well in summary, why is it that you would want to trade penny stocks? They're very speculative. There's a lot going on. Well, that is a personal preference thing.

but whenever I consider approaching any market I ask myself well participating in this market provide me with a decent probability that I'll be able to make money. If I learn everything there is to know if the answer is yes, then I'll enter the market and learn everything that there is to know for everything that I need to know in order to start participating and pushing the probability in my favor. That being said, penny stocks aren't the easiest thing to trade. I've always recommended that people start with mid-tier or even large cap stocks or perhaps ETFs when they're just getting started.

But penny stocks do offer a massive amount of upward potential, and it's one of the only areas of the stock market where you can see fairly fairly common opportunities with a hundred percent or more an upward potential. Now, you're not going to catch all of the move, or maybe not even 60% of the move. But if you were just to catch 40% of the move, I mean that's a pretty good move, right there. Penny stocks tend to spur a lot of people in because they see these promises of huge returns, but these things never come easy and they never come quickly like the rest of trading.

Your financial results will be based on how consistent and how dedicated you are to the learning process and how much experience you accumulate in the SEC. But when approached correctly, Penny Stocks can be one of the most exhilarating and rewarding niches within the stock market. My recommendation is to add penny stocks to your training inventory, but to only make them one part of your trading inventory. You should also be trading leveraged Etfs.

You should be trading larger cap stocks. You should be trading micro cap stocks. We traded mid-tier stocks. Anything with opportunities and volatility that we need to trade off it then also have the risk vs.

reward in our favor anyways. I Hope this video is helpful folks. If you have any questions, don't forget to comment below or reach out to us on the Zipp Trader Circle Facebook group. We also have a discord chat now which you could join by going to the Facebook group and clicking the top link in the description as another resource.

We also have a trading tutorials playlist which can be very helpful for a lot of new traders. so if you've completely lost, you could start there and then work your way up anyways. Have a great day folks and I'll see you in the next video.