Micro Cap Stocks
Micro Cap Stocks list is a micro cap stock screener to find the best micro cap stocks trading on the NYSE, NASDAQ and AMEX today.
Micro cap companies are usually the ones that are having financial difficulties or new listed companies and their stocks can go up and down much quicker than large cap stocks.
Therefore while microcap investing may offer more rewards than large cap stocks, they are also much riskier.
Micro Cap Stock Screener
The list of micro cap stocks is updated each day after market close, and is sorted by the biggest percentage gain of the day.
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How to Trade Micro Cap Stocks
As we stated above, micro cap stocks are very risky to hold for the long term because a lot of companies tend to go bankrupt. An investor needs to really know what he is doing to be able to invest profitably in micro cap stocks. In other words, the odds is against you, and the average investor is better off buying index funds such as the SPY than investing in micro cap stocks.
However, trading micro cap stocks is a different story. Trading means we buy a stock and sell it in a very short time, usually less than two weeks. We trade because we believe that we can profit from the price fluctuation of a stock rather than fundamental changes of a company.
To increase our chances of picking a winning stock, we use technical analysis and stock chart patterns to identify entries and exits. If you are new to trading, read the following articles to learn more about how to swing trade.
- How to Swing Trade Stocks
- Top 10 Chart Patterns
- Penny Stock Strategy
Try Smart Scan for profitable trade setups
We will be using the same trading strategy that we presented in the above "Penny Stock Strategy" article. In a nutshell, here's what we are looking for in stocks
- We are looking for stocks that are trading from $0.8 to $5 on NASDAQ, NYSE or AMEX.
- The stock must be up at least 80% within the past 1-20 days
- The stock has a single day spiked of at least 30% and it must be with much more volume than the average days.
- The stock has now fallen over 40% from the peak and is now trading with very low volume.
One stock that met our criteria a few days ago was AESE, and it ended up gaping up nicely from below $2 to the high of $3.3 which is a gain of 65%.
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Our goal is to trade these type of stocks and set a profit target of 30-40%. Our stop loss is 10% and there is a time stop whereas if a stock doesn't go up in 10 trading days, we would exit the trade.
We watch a lot of these stocks and buy the ones that we like. Buying decision are determined by technical analysis and chart patterns. Usually, we try to buy a stock where the support or recent low is within 10% of our entry price to minimize our risk. Of course, that would mean we also missed a lot of potential trades. However, the point of this strategy or trading in general is to protect our capital first, and then profit rather than taking a lot of risks.
You can learn more about this strategy in How to Trade Penny Stocks.