Buying And Selling Penny Stocks For Dummies - Find Good Penny Stocks To Buy Based On Trading Volume Scans

Before we talk about finding good penny stocks to buy right now with the 2010 economy conditions, it is better to first look at questions on how to avoid losing your account by buying penny stocks for dummies. First understand that we are only interested in short term investment tips on trading low valued equities to make money, in other words these are not the typical strategies used on long term investments for stocks listed on NYSE or NASDAQ.

Penny shares traders are usually day traders that get in and out of their positions within the same day because of the very volatile nature of these micro-cap market price movements. This is the reason why beginners to online buying penny stocks are often caught by surprise as the experienced do not really bother whether it is a good or bad 2010 economy now, they are only concerned about the daily price ranges on the hot penny stock picks right now based on trading volume.

Most newbies that wanted to learn to trade penny stocks for small profits are generally those people with a bit of spare cash lying around and dream of making money buying and selling shares online but the usual NASDAQ or NYSE listings are too expensive for them. Here, they can start trading low priced penny stocks under $5 and they can even leverage a small amount of capital into a larger number of shares that can result in very high returns on investment or losses as well very quickly due to their volatile price movements.

Buying Good Penny Stocks For Profits

The first thing to buying good penny stocks for profits is to be able to monitor the markets for potential winners by sitting in front of the computer watching trading cycles for long hours day in day out until you develop some market intuition. Since the market moves very rapidly and there is a lot of information on the news such as bottom bouncers, bankruptcy buys, quick flips and reverse merger buys etc to be processed, not many new and beginner investors are able to recognize a potential buy cycle based on trading volume.

The risk potential for these cheap penny stocks under $5 is due to the fact that most of these small companies are not likely to make it successfully and grow their business operations into next level. However, many listings in the penny markets will still be good penny stocks to buy as short term income generators.

Beginners that are trying learn how to make money trading penny stocks should beware of "pump and dump" scams that are abound in stock pick forums and newsletters. If you have ever received a kind hearted email sharing with you nice stock market secrets on the best penny stocks to buy and make a nice profit over the nex few days, yes these are the penny stock scam artists at work here. These are actually big players that will hype up a particular listing and drive thousands of smaller newbie investors into the bandwagon in hope of making some profits. However, if you join the herd, the only profits will probably be made by penny stock scam players that can exit by dumping their shares at a nicely appreciated price thanks to your buying in. Such activities happen every day on these markets because there are a lot of uneducated investors who are naive and habor some greed for quick and easy money from penny stock trading.

So is it possible for ordinary folks with zero finance background and education to really make quick and easy money from buying and selling penny stocks online? Is there a low risk method of trading penny stocks for dummies with acceptable returns on investment? The attraction (or even addition) of penny stock markets is their volatility and low valuations. We are talking about rising and dropping hundreds of percentage points in an hour, sometimes as much as 300%. This allows high risk speculators the opportunity to make quick money if they use penny stock leveraging as well. Even if you have a relatively low risk appetite, you will not lose a lot of money as long as each order you put in has a stop limit at 5% of your entire investment capital. Unless you are hit by an incredible series of bad luck, or you fail to learn from previous penny stock trading mistakes, you still need 20 consecutive mistakes to wipe out your entire account. The irony is that most of the biggest losers in the penny stock markets are not the newbies. Those that go overboard trading penny stocks at huge volumes thinking they were more experienced are the ones at risk.

Online penny shares trading today is very different from the time just 10 years ago. It is so much easier for newbies to learn and start buying and selling stocks after a few hours of stock trading lessons. With access to instant online trade execution, you can also avoid the costs involved with a full service broker and put in your orders on your own with your home computer. Most intermediate day traders choose a broker that offers the cheapest commissions based on the volume of trades they make per month. Typically, you can assume less than 30 trades for most stock market investment beginners while those intermediate day traders make between 50 to 100 trades a month.

Trading Volume Based Penny Stock Software Scanner

Using a penny stock software scanner is an effective method to find good ones to buy. These screeners read in several technical indicators in order to make buy/sell recommendations and is an valuable penny stocks trading tool for dummies. Unlike the listed equities on the NYSE or NASDAQ big boards, most penny stocks with low market capitalization do not have very high daily volume on a consistent basis. Some only have an average daily volume of over one hundred thousand dollars, while daily trades under five thousand can be the norm as well. This is why the daily volume scan is the single most important technical indicator for learning to pick hot penny stocks to buy for profits.

A volume jump can signal that a penny stock is either going up or coming down very quickly. To learn how to interpret penny stock movements for newbies, you need to understand the fundamental causes for these jumps in the trading activity. There can be some massive panic selling underway, and this can be a good bounce play opportunity, so continue to watch the stock carefully and pick a bottom to enter. If there have been a positive news release by the company, usually a buying frenzy will be triggered by all the beginner penny stock traders entering that can send prices up for several hours or even days. Then we have the scammy pump and dump operators that just exploited their loyal penny stock picks newsletter subscribers who blindly follow a particular recommended to buy large blocks of shares.

I am not comfortable with short selling due to my penny stocks trading mistakes made when I was learning to make money from stock market online so now my favorite volume scan scenario to pick winners is the bottom bouncer, where traders are dumping a particular stock down to new 52 week lows in a hurry. The secret here is accurately predicting where the support will kick in on the chart, and place limit buy orders there. More often than not, I can get 50 to 100 percent profit following a push upward that occurs there after. There are other types of software stock scans, but volume breakouts have relatively easy to master for beginners trying to learn buying penny stock online.