As millions of people’s habits changed in the Great Shutdown due to the pandemic, many people lost their jobs and began to use their inherited money (Millennials) on the stock market. While traditionally considered very risky, the Fed’s propping up of the stock market has actually created a Renaissance in the Spring of 2020.
According to the Securities Exchange Commission (SEC), the definition of penny stock is any security trading under $5.00 per share.
A brand new kind of Robinhood day trader began to emerge, one with an interest in short-term investments in startups and penny stock fluctuations that have been occurring more so than usual in biotech, oil, energy and related industries due to market uncertainty.
With many of us stuck at home, activities such as binge-watching Netflix, gardening, and Zoom yoga have become increasingly popular and, quite intuitively, — so has stock trading. Remember this is the first time many young investors have ever entered the stock market, but they aren’t investing like baby boomers. They are trying to trick the system into a quick buck.
Identify Potential Stocks
The key to investing in potential stocks is to spot them in the first third of their curve’s rise, stocks that have the greatest likelihood of near-term increases in volume. To do this simply start here:
- Download the app Stocktwits for speculative rumors and to create a watch-list.
- Create a long-term watch list of stocks you own on CNBC’s app.
The key is to invest in stocks with high probability of short-term momentum that have valid business models (not just pump and dump scams). A good place to research the companies are on Yahoo Finance, Barchart and stocktwits itself. Now, all it takes is one win a month to make penny stock trading worth it all around.
For example, Google the history of stocks such as UAVS, GNUS, MVIS or even more lucrative biostocks and you get an idea of how that might work. You just need to be able to pick one winner a month to make thousands of dollars.
- UAVS was $0.35 on April 13th, on April 29th it spiked to $2.30. Selling at the right time perhaps is the most difficult part of the equation.
- GNUS was $0.30 on April 30th, on June 4th it reached $10.92. So if you had invested in UAVS, and put that money you made into GNUS – you are getting my drift.
As millions of people lost their jobs, some won’t be going back to work. This is because they were able to catch the V-shaped recovery of the stock-market, on penny stocks or otherwise “coronavirus” influenced stocks.
Even if you played it entirely safe and just followed the high volume movers of the day, bought at 9 am and sold at 10:15 (ish) am the same day or the next day at 10:18 AM (when stocks are typically at their peak), you would make money.
Barchart has sortable volume for micro stocks and penny stocks which makes this exercise pretty easy. To be safe you want to get into stocks in the 0.30 to 0.60 period of their curve, and exit above the $1.00 mark. Sometimes it goes considerably higher.
- On April 24th MARK was $0.38, by May 27th, it was $3.40. Considerably higher than the $1.00 mark. For many of these penny stocks, this requires you to be patient for longer than a 2 week period.
Finding the exit point of a penny stock is all good when you are in the green, but to get several 100 percent gains sometimes requires patience, luck and good judgment. Experience will also help with this. I don’t recommend buying a stock under $0.10 or above $2.00 since the value-play in doing so is vastly diminished.
Typically penny stock traders are not trading much money at all, even a $300 initial investment is sufficient. The whole idea is you are creating capital which will be taxed in the 20 to 25% bracket. It’s a Millennial side-gig that’s growing in popularity.
If you do your due diligence (DD) and experiment in biotech stocks in particular, there’s a margin of value in doing so. Even the poorest American can enjoy the stock market that has been booming in recent weeks, and the answer is in the penny stocks.
In these times of great uncertainty there has been a veritable flood of stock purchases by DIY — do it yourself — investors. Stocktwits really is a very useful app to team up with others who are doing this trading already. This is because of the highly speculative affair of PR, rumors and initial offerings that make up the penny stock world.
You need to measure the objective data, the sentiment and verify that this business is legit and balance the risk in your portfolio. You have to be ultra rational.
To play penny stock investing sounded insane before the pandemic. But after the pandemic, it’s literally not that insane or risky. As the internet begins to lose more of its humanity, playing the hype game feels more normal. Stocks with good momentum can create a curve that rises against all the odds.
This is also because Millennials prefer to invest in stocks that have a corporate social good element. The so-called “feel good” stocks that create value, or SGI. Millennials invest differently and, by tagging along, you can find profit. Literally doing as they do means following penny stocks up their volume cycles.
It’s odd to think that the ‘penny stock trading is dangerous‘ narrative might be one of the biggest myths of investing in 2020. Good luck. RobinHooders! Got the Stocktwits app? You can follow me here. Let’s take a look at some more successful penny stocks in recent times.
- XPSA on March 19th was $0.12, on June 5th it was $2.90. The main action on this stock actually started on June 3rd. Penny stocks doubling in value temporarily in two or three days is not uncommon in the bullish “recovery” phase of the stock market in Early summer, 2020.
- CIDM was $0.73 on June 2nd, by June 4th it has reached $3.63. This is a good example of a momentum play on a penny stock. So here we aren’t just talking about doubling your earnings! Keep in mind this is piggy-backing on the stock-market recovery bullish flavor of the macro conditions. Basically every week there are such stocks, you just have to identify them and get on for the ride.
- VAL was $0.35 on June 4th, shooting up to $0.96 on June 5th on good jobs news in May that could increase energy demand.
- VISL was $0.29 on May 29th, going to $1.46 on June 6th. The pump-and-dump activities of penny stock traders in mid 2020 guarantees new volume and a never ending cycle of potential profits.
This article was posted on the penny stocks Subreddit. As for longer investments you can see what’s trending on the Robinhood app here.