Best Penny Stocks to watch for 2022 is a tool to scan for top penny stocks today. This hot penny stocks list includes trending penny stocks, stocks that are gaining momentum, breakout penny stocks, and some of the most volatile penny stocks. All of the stocks are trading on the NASDAQ and NYSE. If you are just getting started in penny stocks trading, see below for a complete guide on how to swing trade penny stocks.
Updated on May 20, 2022
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This penny stock list does not include OTC penny stocks. All stocks listed here are from the NYSE, NASDAQ and AMEX. You can track and trade these penny stocks on Robinhood.
If you are interested in finding OTCBB stocks, please use OTCBB penny stocks.
With the list of all penny stocks, you can easily search for the best penny stocks 2022 with price and volume filter.
It is recommended that penny stock traders should stick to only stocks with high volume to avoid manipulation and slippage costs.
Penny Stocks Guide for Beginners 2022
This is a step by step penny stocks swing trading guide for beginners 2022, you will learn about how to select a penny stock broker to actual penny stock strategies that still work in 2022.
Before we dive into the world of penny stocks trading, it is important to learn some basic knowledge of penny stocks and define what penny stocks are.
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What are Penny Stocks
By definition, any stock trading under $5 on the regular stock exchanges, NYSE, NASDAQ and AMEX is considered a penny stocks.
Then, there is the other kind of penny stocks that are trading on the OTCBB market and pink sheet penny stocks. The ones that are trading on the OTCBB market is much riskier than the one listed on the regular exchange.
Most of the stocks trading on the OTC market has very low volume, and stocks can go up and down a couple hundred percent in a single day. In this penny stock trading guide, we will focus on the stocks that are listed on the regular exchanges.
How to Buy Penny Stocks Online
Many online stock brokers now offer commission free trades to trade stocks on the NYSE, AMEX and NASDAQ, but some still charges a fee to trade OTCBB stocks. Trading commissions can add up quickly for frequent traders who get in and get out of the market often especially for day traders.
However, trading commission is not the only thing that you should be looking at when selecting a stock broker. The reliability of the trading platform is even more important. You want to make sure their system doesn't go down when you need to buy or sell a stock. If you want to cut a losing position and their system go down, it could mean disaster for you.
For beginners, choosing a stock broker that offers extensive research about the market and individual stock is important, you don't want to miss out important information or a critical event about a company. For penny stocks, these events could make or break a company in a single day.
For day traders, you may want to have a platform with powerful charting tools so you can analyze the stock and determine when to enter a trade.
We have compiled a list of the top 5 best online stock brokers for penny stocks trading that you may consider.
How to Invest in Penny Stocks
The focus of this article is the penny stocks that are trading on NASDAQ, NYSE and AMEX. We will leave OTCBB penny stocks for another post.
In general, investing in penny stocks under $1 is risky. Most cheap stocks are cheap for a reason. The companies behind the penny stocks is not doing well. Many of these companies are on the edge of bankruptcy or in the risk of being delisted from the major stock exchange.
In the long term, most penny stocks go under, so the odds is actually against you to buy and hold penny stocks.
With that being say, it is still possible to find undervalued penny stocks where a company may be struggling temporarily, and is trading at a discount. There could be times when the general market is down when the economy is in a recession and drags down the price of most stocks. As soon as the economy starts to recover, the penny stock may moves up much faster than the general market. And then there is the case where a company has a quality product that is still unknown to the general public. Once the company speed up their marketing strategy, it may drive up their stock price quickly.
These are the valid cases of why we invest in penny stocks. However, it is easier say than done. One needs to be prepared to spend a lot of time studying the fundamental side of the company. Here are a few questions to ask when looking to invest in penny stocks.
- Does the company has a quality product?
- How is the competition like?
- Is the management team strong?
- Is the company making money?
- Is there cash flow in the company?
- What's the revenue growth rate year-to-year and quarter-to-quarter?
- What's the profit or the net income growth rate year-to-year and quarter-to-quarter?
These are the basic questions one should ask before investing in any penny stocks. To learn more about penny stocks, read
Penny Stocks For Dummies
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How to Trade Penny Stocks
Trading penny stocks is different than investing in penny stocks. Trading means you buy a penny stock and sell it within a short period of time. Day traders buy and sell during the same day, and swing traders hold their stocks from a few days up to several weeks.
The goal of a trader is to make a profit of the price fluctuations instead of investing in a company. Traders don't care what the company will do in the long term. What they care about is a company's current stock price and tries to predict which direction it will go in the short term.
To help making these predictions, technical analysis and chart patterns are developed. Based on the patterns that have worked in the past, traders believe these same patterns will work again in the future. To learn more about technical analysis, read
Technical Analysis of the Financial Markets
Penny Stock Strategy
Let's dive in to how to trade penny stocks for profit, and I will share a penny stock strategy that works fairly well for me.
First, we have to compile a penny stocks to watch list with the following conditions.
- Stocks trading in the range of $0.8 to $5 on NASDAQ, NYSE or AMEX.
- The stock must be up at least 80% in the past 20 days, with a single day spiked of 30% or more. On the spike day, the trading volume must at least 8 million and are much large than the regular days.
- The stock then fall over 40% from their peak with low trading volume.
Here's one stock PHUN that matched our criteria. The stock gap up 94% with 80 million in trading volume which is huge compared to the normal trading activity of the stock, and it has now falling over 40% since its peak.
Our penny stock strategy is to buy this stock around the price of $1.10, and set a profit taking of about 20% - 30% which is around $1.32 - $1.43.
Note, we should always set a stop loss for all our trades. For penny stocks, I usually set a higher stop loss than when I trading regular stocks.
The reason is penny stocks are very volatile and if you set a narrow stop loss, you will get hit almost every time.
In this case, I would set my stop loss to be $0.98 which is about 11%. I do not want to set the stop loss at $1 which is a round number,
because often times when a stock hit these round numbers, they tend to bounce back. If they drop through these round numbers, then its time to cut our losses.
Also, as I stated above, most penny stocks go bankrupt in the long run. I do not plan to hold this stock for the long term.
If the stock doesn't hit my price target within 10 days after I bought the stock, I would sell it.
Here's our penny stock trading strategy in a nutshell,
- Find stocks that match our criteria
- Wait for them to drop
- Buy them when they fall over 40%
- Set profit target of 20%-30%, you can set higher or lower for your own preference.
- Set stop loss of 10%
- Set time stop of 10 days
Following our trading method, I found PSV to be a interesting stock to watch and I added to my watchlist. It meets all the conditions for our trading strategy. The stock gaped up over 150% during intraday on 6/5 with huge volume compared to the average days. It then declined over 65% in the course of a few days with light trading volume. The stock is now trading around the previous support or the low before the gaped up.
I put in a limit order to buy the stock at $0.51 and bought the stock on 7/7. Three days later on 7/10, and I see this.
The stock made a massive moved on 7/10 and it was up over 520% during intraday high. Unfortunately I sold the stock at open at around $0.85 when the stock was up only about 70%. Overall, I made a nice profit of around 67% on this stock in two days which I'm pretty happy with. I didn't kick myself for missing out the big profit that I can potentially make on this trade, although it hurts a little bit from watching the intraday moves.
You see, for many beginners and even experienced traders. Instead of feeling happy for their 67% gain, they would get emotional and feel upset for a few days if not a few weeks for missing out the other 300% on the trade. This kind of attitude will influence their trades in the future, and they may get crush from holding too long on future positions.
Instead of feeling sorry for myself, I focus on how I can improve my trading skills. Maybe I should hold a few minutes longer before selling a profitable stock in the future. Maybe I should use intraday charts to help me buy and sell. I analyze my trades with logic instead of being emotional. If you are in this game long enough, you will learn that missing out is part of the game. The point is that you need to be able to make money consistently instead of getting lucky with one trade.
You can visit How to Trade Penny Stocks to learn more about this strategy.
Trading is an art, not a science. Relying solely on technical analysis and chart patterns are not enough to beat the market. Two traders following the same pattern and system may produce different result. The other part of the equation to trading success is discipline.
As human beings, we are affect by our emotions. When it comes to money, we tend to make decisions based on our emotions, and not on logic. That's why most people lose money trading in the stock market because they buy stocks when they should be selling, and sold stocks when they should be buying. In other words, people do the exact opposite of what they should be doing.
Therefore, if we want to stay in the game of penny stocks trading, we first need to develop the discipline that is required to succeed. Here a few common scenarios where traders lose money.
- There are traders who are afraid to put on a trade even though their system tells them to do so, they kept waiting until it is too late. Out of desperation, they finally bought the stock only to see the trend reversed and their stock started to drop like crazy. This is one scenario how a trader turned a potential winning trade into a loss.
- Then there are traders who have big ego problems and never admit when they are on the wrong side of the trade. These traders kept holding on to their losing trades, and hoping the stock will reverse so they allow can exit the trade breaking even. These traders allow a small loss to be turned into a disaster. They would cut their losing positions only when the loss is becoming so big that they can no longer tolerate, or until the company went under.
- They find the next trade and repeat 1 & 2 all over again until their portfolio is crushed.
Trading psychology is a skill that you must mastered in order to make money trading penny stocks. Read the following book to learn how to develop the confidence, discipline and a winning attitude towards penny stock trading or trading in general.
Trading in the Zone
To learn more about penny stocks trading, read the following articles
How to Trade Penny Stocks
How to Find Penny Stocks
Penny Stocks for Beginners
Penny Stock Strategies
Penny Stocks App
To find penny stocks on your cell phone, you may want to install our penny stocks app for Android and iPhone. One can search for daily penny stock gainers and losers quickly with the app just like the web app.
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To find penny stocks from different industries or sectors such as healthcare, oil, tech, biotech and dividend penny stocks, visit penny stock scanner.
Penny Stocks to Buy
This list of penny stocks is a watchlist, not a buy list. These are not stock picks and we do not make any recommendations on which stock to buy or sell.
To reduce risk in trading penny stocks, one should limit themselves to trade only high volume penny stocks to avoid manipulations by big players.