About Penny Stocks

Thinking about trading penny stocks?

What are the best ways to find the hot penny stocks to watch before they break out?

Believe it or not, the process of selecting a quality micro cap stock isn’t that much different then the research methods used on big board blue chips.

Aim High Profits generally breaks down a Company in the following manner:

Industry Group

Execution of Business Plan

Liquidity

Management

Financial Statements

Liquidity is the Major Factor

The trading volume of a small cap stock is the most important factor to look for. We rank this above the company fundamentals. There are some great cheap stocks out there that have revenue, profit and tangible assets. Despite this these stocks are not worth buying due to the fact that they have virtually no liquidity. The number one mistake we have seen newbie traders make is in buying a micro cap that they are familiar with and believe is a solid company only to later realize that their investment is impossible to ever sell.

Trading volume is also important in that it is often a precursor as to a possible swing in the stock. Typically when the shares trading hands increase the price volatility will as well.

Penny Stock Trades

We spot the penny stocks that are just about to breakout. When it is in its bullish pattern, you can make a killing in profits. Our subscribers have commented to us that we have an uncanny ability to pick the “Breakout” penny stocks just days before they experience gains. Subscribers all share the same strategy you too can use to trade in penny stocks and make big profits.

Most penny stock traders tend to try and “quick flip” in and out of trades. We follow the same strategy, but are always on the lookout for stocks that we believe have potential over an extended period of time. In our experience the highest profits to be earned come from these types of deals.

Our first example, Acadia Healthcare Co., Inc. (AMEX: ACHC), is our best performing stock, year-to-date in this sector. January 4, 2011 we alerted on it at $1.61. By January 27, 2011 it was $2.35. That was a gain of $0.74 or 45.96%. It peaked again on May 24, 2011 at $3.61. That’s a gain of $2.00 or 124.22%. November 1, 2011 it skyrocketed to $9.00. ACHC was up 459.01% in 11 months.

Another example is Genetic Technologies Limited (NASDAQ: GENE). January 5, 2011 we alerted on it at $1.01. By January 19, 2011 it was $4.85. That was a gain of $3.84 or 380.20% in 2 weeks. It peaked again on May 3, 2011 at $8.14 and again May 11, 2011 at $9.13. Those are gains of $7.13, 705.94%, and $8.12, 803.96%, respectively. Therefore, a $1,000 investment in GENE in the first week of January would have provided a return of $9,038.70 in 5 months.

To find profitable short-term trading opportunities, Subscribe to receive our Free Penny Stock Alerts Newsletter. You will learn the skills of technical analysis. It is an essential tool for the short-term penny stock trader. Make a simple trading plan that has good success rate and test it by doing paper trading initially.

Penny Stock Trading Resources

Here is a good list of sites that will provide you with current information on micro cap stocks:

Quotes – OTC Markets

OTC Markets provides accurate, (delayed) quotes, press and financial statements on just about all penny stocks. If you bookmark one site to get your information, this would be it. If you want real time quotes you best bet is to access those through your online trading account, the few paid services out there are not worth the money.

Charts – Stock Charts

Allows you to configure charts with a variety of custom variables to monitor the data you want to track. for more information on how to read and use stock charts, please see our article here.

Historical Performance – Profit Spi

This is a great site to get historical data on penny stocks. You can quickly see 5, 10, 30 and 50 averages for price, volume and other pertinent data, all on one page.

Penny Stock Trades

Some of the hot penny stocks so far this we have covered extensively include:

Many penny stock alert services tend to “pump and dump” their profiled companies. On the other hand, we have alerted subscribers of companies that not only made overnight profits, but held them as well. flipping penny stocks in a few hours can be great, but the best gains come from the Companies that have sustained activity over a period of time.

Our first example, Brownie’s Marine Group Inc. (OTCBB: BWMG):
BWMG is a company we know very well and have even been customers of for many years. In January, BWMG stock was trading as low as 0.002. On some savvy research and patients, we were able to sell for as high as 0.075, a gain of 3,650%. The best part is, the stock is still rising having hit .09 just days before which would have been a 4,400% gain.

Another recent example is the stock of Cannabis Science Inc. (OTCBB: CBIS) which was trading for an actual penny in the beginning of 2012. Again, with some savvy research and patience, we watch the shares of the penny stock rise from 0.0196 at the time of our alerts to a high of 0.245 at the start of March making the CBIS picks gain 1,150%.