Hot penny stocks are certainly a hot topic these days. What I wanted to know is what are they? Can they make me money…and of course, how risky are they? They sounded extremely risky but I have to admit I was very intrigued by their potential. We’ve probably all heard stories about some guy who turned $1000 into a million dollars with penny stocks, but are they for real?
Well first…what are hot penny stocks? A hot penny stock is basically a penny stock that is either about to make a huge move upwards, or has already begun making a big move.
I’ve traded regular large cap NYSE stocks for years and was very curious how trading penny stocks would be different from the stocks I was used to trading. I’ve found that it’s really just a more intense and fast paced version of the same thing.
So what are hot penny stocks exactly? How do you know which penny stocks are hot, and which ones are not? Basically, here is how it works. Since penny stocks are small and relatively unknown, they aren’t really covered on television, or by major analysts. Most coverage of penny stocks is conducted by online newsletters. There is a surprisingly large community of penny stock investors and traders that follow these newsletters.
So how do you find out where the hot penny stocks are? My advice, follow a newsletter.
Now, how much money can you make on hot penny stocks? I’ve personally seen gains as large as 2000% in one day. However, that is uncommon. More realistically, a nice gain that is very common is anywhere from 50% - 300% within 1 day to 1 week.
How risky are they? VERY risky, but NOT if you play them correctly. Hot penny stocks make huge quick profits, and they cool off just as quickly as they heat up. The key to success is to take profits when you are up. Don’t be greedy. Be ready to bail out quickly if the trade turns against you, and ALWAYS cash in profits when you are up. When I receive an alert on a hot penny stock, I act on it right away and I sell when I make a solid profit. I think it’s too risky to not cash in when I’m up. That is what works for me, and it works very well.
It’s also extremely crucial to choose the right newsletter to follow. There are a few decent ones out there but I’ve found the most reliable and consistent one to be www.pennystockalerts.com.
I recommend my trading strategy and the newsletter I just mentioned, but you should experiment and see what works for you. It’s a lot of fun and I make money with penny stocks a lot faster than I used to with the big boys. I’ve gone from making 30% a month to making 30% a day. Hope it works out the same for you.