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Stocks Under $5

Best Stocks under $5 is a list of trending stocks under $5 and above $4. These stocks are traded on NYSE, NASDAQ, and AMEX and sorted by percentage gain of the day so traders can easily see the top stocks under 5 for today. To filter stocks by any price and volume, please use our free technical stock scanner.

Best Stocks Under 5

The top stocks under $5 list is updated daily after the market closes. Please check back for the newest low-price stocks.

9/30/2022

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Symbol Chart Open High Low Close Volume % Change Stock Predictions
OIIM 3.22 4.31 3.22 4.23 1792200 30.15% OIIM Stock Predictions
DUOT 3.80 4.23 3.80 4.06 4500 11.23% DUOT Stock Predictions
IREN 3.81 4.19 3.62 4.13 224100 9.26% IREN Stock Predictions
PRTH 4.20 4.54 4.08 4.51 18800 8.67% PRTH Stock Predictions
ZVIA 3.95 4.34 3.95 4.32 246000 8.54% ZVIA Stock Predictions
ANIX 4.56 5.20 4.55 4.92 139900 7.89% ANIX Stock Predictions
BCLI 4.20 4.56 4.13 4.42 469200 6.00% BCLI Stock Predictions
SGHC 3.78 4.12 3.78 4.08 140000 5.97% SGHC Stock Predictions
HRTX 3.97 4.48 3.96 4.22 2179100 5.24% HRTX Stock Predictions
LSTA 4.33 4.80 4.32 4.63 106500 4.75% LSTA Stock Predictions
SKE 4.48 4.87 4.46 4.68 78400 4.70% SKE Stock Predictions
PLBY 3.81 4.14 3.80 4.03 1072300 4.68% PLBY Stock Predictions
PCTI 4.61 4.88 4.60 4.72 67400 4.66% PCTI Stock Predictions
VIRX 4.04 4.40 4.04 4.27 92900 4.40% VIRX Stock Predictions
TRHC 4.38 4.81 4.38 4.80 219300 4.35% TRHC Stock Predictions
GIFI 3.91 4.20 3.90 4.17 43300 4.25% GIFI Stock Predictions
AMBP 4.68 4.91 4.68 4.84 1240300 4.09% AMBP Stock Predictions
CHS 4.60 4.91 4.43 4.84 3844500 4.09% CHS Stock Predictions
SATL 4.44 4.58 4.41 4.58 10200 4.09% SATL Stock Predictions
IMNM 4.27 4.76 4.26 4.44 26400 3.98% IMNM Stock Predictions
IXHL 4.33 4.41 4.22 4.34 5800 3.83% IXHL Stock Predictions
TAL 4.76 4.94 4.69 4.94 4587800 3.78% TAL Stock Predictions
LTBR 4.36 4.78 4.36 4.56 32200 3.40% LTBR Stock Predictions
DRIO 4.48 4.86 4.48 4.63 369200 3.35% DRIO Stock Predictions
BYRN 4.55 4.91 4.55 4.70 107400 3.30% BYRN Stock Predictions
BTMD 4.14 4.28 4.04 4.28 50900 3.13% BTMD Stock Predictions
EVTV 4.41 4.66 4.41 4.66 21500 3.10% EVTV Stock Predictions
GGB 4.36 4.61 4.34 4.52 10256700 2.96% GGB Stock Predictions
TSI 4.57 4.73 4.56 4.72 64600 2.83% TSI Stock Predictions
CEPU 4.32 4.51 4.27 4.40 157300 2.80% CEPU Stock Predictions
ENLV 4.36 4.42 4.19 4.25 6600 2.66% ENLV Stock Predictions
PANL 4.50 4.70 4.50 4.62 169900 2.44% PANL Stock Predictions
CGAU 4.34 4.43 4.26 4.41 339600 2.32% CGAU Stock Predictions
IRS 3.93 4.08 3.92 4.07 38700 2.26% IRS Stock Predictions
DADA 4.57 4.85 4.57 4.73 802400 2.16% DADA Stock Predictions
MIRO 4.16 4.43 4.16 4.38 15800 2.10% MIRO Stock Predictions
CVGI 4.45 4.57 4.36 4.50 216300 2.04% CVGI Stock Predictions
KMDA 4.46 4.56 4.36 4.51 61700 2.04% KMDA Stock Predictions
NWG 4.95 5.09 4.94 4.99 3040600 2.04% NWG Stock Predictions
EH 4.07 4.57 4.05 4.21 485300 1.94% EH Stock Predictions
SES 4.77 4.90 4.60 4.88 468500 1.88% SES Stock Predictions
PESI 4.42 4.64 4.32 4.48 74600 1.82% PESI Stock Predictions
USDP 3.97 4.06 3.97 4.02 28100 1.77% USDP Stock Predictions
CYXT 4.01 4.15 3.93 4.08 789800 1.75% CYXT Stock Predictions
NVX 4.60 4.80 4.53 4.70 34300 1.73% NVX Stock Predictions
IMGN 4.76 4.99 4.74 4.78 2100900 1.70% IMGN Stock Predictions
PRVB 4.40 4.65 4.38 4.50 406600 1.58% PRVB Stock Predictions
ULBI 4.84 4.90 4.64 4.81 22400 1.48% ULBI Stock Predictions
BKT 4.11 4.14 4.07 4.14 310600 1.47% BKT Stock Predictions
MMT 4.23 4.25 4.17 4.23 116300 1.44% MMT Stock Predictions
ARR 4.88 5.02 4.82 4.87 5537700 1.25% ARR Stock Predictions
MYNA 4.71 5.34 4.71 4.86 3000 1.25% MYNA Stock Predictions
OILD 4.92 5.05 4.68 4.86 751500 1.25% OILD Stock Predictions
TME 4.02 4.18 4.00 4.06 6878000 1.25% TME Stock Predictions
YOLO 4.20 4.35 4.20 4.25 27100 1.19% YOLO Stock Predictions
BHR 4.28 4.41 4.23 4.30 460000 1.18% BHR Stock Predictions
CULP 4.29 4.40 4.28 4.36 9500 1.16% CULP Stock Predictions
IVAC 4.61 4.72 4.52 4.65 28400 1.09% IVAC Stock Predictions
CPAC 4.65 4.70 4.65 4.67 6700 1.08% CPAC Stock Predictions
FARM 4.81 4.81 4.64 4.69 56500 1.08% FARM Stock Predictions
FCO 4.73 4.80 4.61 4.75 52700 1.06% FCO Stock Predictions
GCV 4.91 4.99 4.88 4.97 11700 1.02% GCV Stock Predictions
SPNT 4.92 5.05 4.89 4.95 1203300 1.02% SPNT Stock Predictions
PRPL 3.98 4.13 3.94 4.05 1097200 1.00% PRPL Stock Predictions
NVIV 4.22 4.30 4.16 4.29 2400 0.94% NVIV Stock Predictions
HTY 4.43 4.51 4.42 4.44 58600 0.91% HTY Stock Predictions
TEI 4.41 4.48 4.39 4.43 185600 0.91% TEI Stock Predictions
SOFI 4.82 5.09 4.81 4.88 33620600 0.83% SOFI Stock Predictions
ACTG 3.97 4.09 3.96 4.04 118900 0.75% ACTG Stock Predictions
WHLM 4.03 4.17 4.03 4.09 1300 0.74% WHLM Stock Predictions
QIPT 4.25 4.26 4.13 4.17 13200 0.72% QIPT Stock Predictions
BGY 4.43 4.51 4.42 4.47 624600 0.68% BGY Stock Predictions
NG 4.65 4.86 4.60 4.69 1389100 0.64% NG Stock Predictions
SGMO 4.89 5.13 4.86 4.90 1337100 0.62% SGMO Stock Predictions
IBRX 5.01 5.17 4.83 4.97 1452700 0.61% IBRX Stock Predictions
EDD 4.00 4.02 3.97 4.02 146900 0.50% EDD Stock Predictions
DSP 4.21 4.35 4.17 4.21 40600 0.48% DSP Stock Predictions
DALN 4.83 4.83 4.60 4.64 23800 0.43% DALN Stock Predictions
NSL 4.65 4.72 4.64 4.67 202400 0.43% NSL Stock Predictions
BRAG 3.99 4.09 3.99 4.06 5500 0.25% BRAG Stock Predictions
MFV 4.05 4.17 4.05 4.05 9800 0.25% MFV Stock Predictions
GEOS 4.40 4.49 4.35 4.41 20500 0.23% GEOS Stock Predictions
AUY 4.50 4.64 4.47 4.53 17728800 0.22% AUY Stock Predictions
MOMO 4.52 4.72 4.51 4.62 1111300 0.22% MOMO Stock Predictions
PGRU 4.50 4.55 4.48 4.48 14100 0.22% PGRU Stock Predictions
PHK 4.66 4.72 4.60 4.65 410400 0.22% PHK Stock Predictions
INFN 4.83 5.00 4.81 4.84 3002000 0.21% INFN Stock Predictions
GNTA 5.10 5.10 4.98 4.98 700 0.20% GNTA Stock Predictions
BBVA 4.43 4.53 4.43 4.45 2399700 0.00% BBVA Stock Predictions
EGY 4.35 4.41 4.24 4.36 5207700 0.00% EGY Stock Predictions
EQRX 4.90 5.22 4.86 4.95 4046900 0.00% EQRX Stock Predictions
HBM 4.00 4.17 3.91 4.03 519500 0.00% HBM Stock Predictions
ODV 4.50 4.65 4.36 4.55 76300 0.00% ODV Stock Predictions
OPHC 4.16 4.19 4.07 4.07 4200 0.00% OPHC Stock Predictions
OPRT 4.39 4.51 4.30 4.37 244800 0.00% OPRT Stock Predictions
RCS 4.74 4.84 4.70 4.74 162100 0.00% RCS Stock Predictions
STG 4.12 4.41 3.91 4.19 14200 0.00% STG Stock Predictions
TEO 4.00 4.10 4.00 4.01 23800 0.00% TEO Stock Predictions
VLN 4.16 4.43 4.16 4.19 169600 0.00% VLN Stock Predictions
DAPP 4.88 5.18 4.88 4.94 34700 -0.20% DAPP Stock Predictions
III 4.75 4.87 4.75 4.76 105200 -0.21% III Stock Predictions
LTRN 4.74 4.99 4.69 4.78 24600 -0.21% LTRN Stock Predictions
WIT 4.75 4.78 4.70 4.71 2425900 -0.21% WIT Stock Predictions
AATC 4.60 4.62 4.52 4.55 13200 -0.22% AATC Stock Predictions
AEF 4.62 4.63 4.47 4.58 71300 -0.22% AEF Stock Predictions
APYX 4.50 4.74 4.43 4.49 175500 -0.22% APYX Stock Predictions
INCR 4.42 4.51 4.42 4.50 30200 -0.22% INCR Stock Predictions
NOK 4.26 4.34 4.26 4.27 16812400 -0.23% NOK Stock Predictions
DOUG 4.12 4.26 4.08 4.10 472200 -0.24% DOUG Stock Predictions
JRSH 4.24 4.43 4.20 4.24 14600 -0.24% JRSH Stock Predictions
APT 4.01 4.07 3.99 4.05 20000 -0.25% APT Stock Predictions
ASG 4.94 5.08 4.92 4.95 139600 -0.40% ASG Stock Predictions
ASX 5.04 5.12 4.99 4.99 9138700 -0.40% ASX Stock Predictions
LTRX 4.79 4.98 4.77 4.81 137800 -0.41% LTRX Stock Predictions
MFM 4.91 4.91 4.82 4.84 145200 -0.41% MFM Stock Predictions
MBOT 4.76 4.91 4.76 4.78 6200 -0.42% MBOT Stock Predictions
LOOP 4.51 4.57 4.31 4.33 17300 -0.46% LOOP Stock Predictions
BKD 4.27 4.36 4.24 4.27 1838000 -0.47% BKD Stock Predictions
EXTN 4.09 4.23 4.06 4.16 90800 -0.48% EXTN Stock Predictions
MTBC 4.20 4.37 4.11 4.18 32800 -0.48% MTBC Stock Predictions
TESS 4.25 4.28 4.07 4.14 4300 -0.48% TESS Stock Predictions
BLDE 4.03 4.25 3.97 4.03 377800 -0.49% BLDE Stock Predictions
CARV 4.01 4.07 3.92 4.00 25600 -0.50% CARV Stock Predictions
TTCF 4.97 5.19 4.88 4.98 839400 -0.60% TTCF Stock Predictions
GB 4.72 4.72 4.40 4.63 6900 -0.64% GB Stock Predictions
KODK 4.58 4.81 4.58 4.59 602200 -0.65% KODK Stock Predictions
FINV 4.26 4.37 4.23 4.28 339700 -0.70% FINV Stock Predictions
EDI 4.15 4.23 4.11 4.12 31300 -0.72% EDI Stock Predictions
NIU 4.10 4.24 4.05 4.10 329100 -0.73% NIU Stock Predictions
IGD 5.04 5.08 4.96 5.00 480300 -0.79% IGD Stock Predictions
IHD 4.93 4.97 4.91 4.92 34700 -0.81% IHD Stock Predictions
NU 4.42 4.63 4.32 4.40 29876500 -0.90% NU Stock Predictions
EAF 4.33 4.42 4.29 4.31 2028000 -0.92% EAF Stock Predictions
SLI 4.33 4.54 4.32 4.33 666200 -0.92% SLI Stock Predictions
MTRX 4.13 4.29 4.07 4.14 138700 -0.96% MTRX Stock Predictions
BLZE 4.87 5.27 4.87 4.97 130900 -1.00% BLZE Stock Predictions
BFLY 4.77 5.01 4.69 4.70 1318800 -1.05% BFLY Stock Predictions
NDLS 4.75 4.86 4.65 4.70 293300 -1.05% NDLS Stock Predictions
THRN 4.83 4.94 4.69 4.73 27500 -1.05% THRN Stock Predictions
LVLU 4.69 4.92 4.57 4.66 118400 -1.06% LVLU Stock Predictions
MG 4.48 4.56 4.39 4.46 37700 -1.11% MG Stock Predictions
GPRO 4.97 5.10 4.93 4.93 1747600 -1.20% GPRO Stock Predictions
HIMX 4.88 5.03 4.84 4.84 1761800 -1.22% HIMX Stock Predictions
ARLO 4.66 4.84 4.64 4.64 778100 -1.28% ARLO Stock Predictions
CNSL 4.22 4.30 4.15 4.16 485900 -1.42% CNSL Stock Predictions
IMPL 4.91 5.39 4.80 4.87 33700 -1.42% IMPL Stock Predictions
ADCT 4.92 5.16 4.82 4.82 176900 -1.43% ADCT Stock Predictions
LPL 4.17 4.20 4.08 4.08 408900 -1.45% LPL Stock Predictions
TOI 4.70 4.81 4.45 4.63 67100 -1.49% TOI Stock Predictions
MJ 4.64 4.75 4.58 4.59 634400 -1.50% MJ Stock Predictions
AMSC 4.49 4.58 4.34 4.38 134400 -1.57% AMSC Stock Predictions
DSEY 4.89 5.00 4.82 4.86 621700 -1.62% DSEY Stock Predictions
GWH 4.20 4.40 4.08 4.09 1082900 -1.68% GWH Stock Predictions
SURG 4.68 4.68 4.55 4.55 26800 -1.73% SURG Stock Predictions
ACCO 5.01 5.05 4.90 4.90 550000 -1.80% ACCO Stock Predictions
WETF 4.75 4.83 4.68 4.68 1018600 -1.89% WETF Stock Predictions
MITT 4.18 4.32 4.11 4.11 309700 -1.91% MITT Stock Predictions
ASTI 4.48 4.80 4.35 4.55 122000 -1.94% ASTI Stock Predictions
IAF 4.08 4.10 3.99 4.03 62600 -1.95% IAF Stock Predictions
AVPT 4.05 4.21 4.00 4.01 405400 -1.96% AVPT Stock Predictions
MUFG 4.52 4.57 4.50 4.50 3956600 -1.96% MUFG Stock Predictions
TCS 4.98 4.98 4.81 4.90 471000 -2.00% TCS Stock Predictions
FNGG 4.32 4.60 4.25 4.30 103600 -2.05% FNGG Stock Predictions
BB 4.77 4.88 4.70 4.70 5011700 -2.08% BB Stock Predictions
ENVB 4.31 4.50 4.20 4.22 19200 -2.09% ENVB Stock Predictions
RKLB 4.16 4.27 4.07 4.07 2970300 -2.16% RKLB Stock Predictions
RAD 5.02 5.20 4.71 4.95 4783200 -2.17% RAD Stock Predictions
KTCC 4.06 4.11 4.02 4.04 16600 -2.18% KTCC Stock Predictions
INTZ 4.91 5.06 4.82 4.82 28400 -2.23% INTZ Stock Predictions
NAAS 4.39 4.47 4.25 4.29 10200 -2.28% NAAS Stock Predictions
EOD 4.22 4.23 4.12 4.15 154000 -2.35% EOD Stock Predictions
SOS 4.12 4.40 4.11 4.13 46000 -2.36% SOS Stock Predictions
PROF 4.07 4.26 4.04 4.04 12500 -2.42% PROF Stock Predictions
PIII 4.73 5.38 4.41 4.62 140500 -2.53% PIII Stock Predictions
OSCR 5.13 5.18 4.99 4.99 1320400 -2.73% OSCR Stock Predictions
ARMP 4.30 4.38 4.01 4.22 2300 -2.76% ARMP Stock Predictions
YEXT 4.58 4.65 4.46 4.46 586200 -2.83% YEXT Stock Predictions
FENG 4.78 4.80 4.70 4.71 2200 -2.89% FENG Stock Predictions
GDRX 4.77 4.99 4.66 4.67 2755600 -2.91% GDRX Stock Predictions
VIRC 4.38 4.40 4.24 4.26 6400 -2.96% VIRC Stock Predictions
MCG 4.86 5.08 4.72 4.72 482300 -3.08% MCG Stock Predictions
CURO 4.20 4.27 4.01 4.01 209300 -3.14% CURO Stock Predictions
RSVR 5.00 5.04 4.80 4.88 98200 -3.17% RSVR Stock Predictions
PBPB 4.44 4.72 4.44 4.53 23700 -3.21% PBPB Stock Predictions
CURV 4.27 4.44 4.06 4.17 239100 -3.25% CURV Stock Predictions
SGMA 4.84 4.90 4.69 4.75 8100 -3.26% SGMA Stock Predictions
TZOO 4.60 4.74 4.43 4.43 33600 -3.28% TZOO Stock Predictions
GNT 4.26 4.34 4.12 4.12 431000 -3.29% GNT Stock Predictions
SPCE 4.77 4.97 4.71 4.71 5080300 -3.29% SPCE Stock Predictions
GIM 4.23 4.23 4.07 4.07 710700 -3.33% GIM Stock Predictions
HIX 4.51 4.53 4.36 4.36 558300 -3.33% HIX Stock Predictions
LVTX 4.73 4.86 4.52 4.57 102100 -3.38% LVTX Stock Predictions
VMEO 4.19 4.25 3.97 4.00 2319000 -3.38% VMEO Stock Predictions
LUNA 4.57 4.72 4.38 4.44 149300 -3.48% LUNA Stock Predictions
ALLG 4.67 4.70 4.25 4.36 525100 -3.54% ALLG Stock Predictions
RMNI 4.78 4.87 4.65 4.66 228500 -3.72% RMNI Stock Predictions
HTOO 5.13 5.73 4.89 4.99 50900 -3.85% HTOO Stock Predictions
CHMI 5.00 5.16 4.90 4.91 297100 -3.91% CHMI Stock Predictions
IDR 4.91 4.95 4.75 4.75 17600 -4.04% IDR Stock Predictions
ATTO 4.30 4.30 4.00 4.04 10100 -4.27% ATTO Stock Predictions
TRT 4.82 4.82 4.58 4.64 6300 -4.33% TRT Stock Predictions
TIL 5.01 5.17 4.77 4.84 311000 -4.35% TIL Stock Predictions
LSEA 4.75 5.05 4.75 4.77 32200 -4.41% LSEA Stock Predictions
OPRA 4.46 4.46 4.29 4.34 46000 -4.41% OPRA Stock Predictions
JOBY 4.51 4.65 4.33 4.33 4016200 -4.84% JOBY Stock Predictions
TFFP 4.23 4.37 3.99 4.06 226400 -4.92% TFFP Stock Predictions
CGNT 4.25 4.38 4.04 4.04 751200 -4.94% CGNT Stock Predictions
MODD 4.31 4.32 4.12 4.12 5200 -5.07% MODD Stock Predictions
HLLY 4.22 4.32 4.05 4.05 479100 -5.15% HLLY Stock Predictions
CNTA 4.15 4.26 3.89 4.02 319600 -5.41% CNTA Stock Predictions
LPTV 4.64 4.79 4.38 4.46 37100 -5.51% LPTV Stock Predictions
KORU 4.91 4.95 4.69 4.70 462000 -5.81% KORU Stock Predictions
IMAB 4.20 4.27 3.92 4.01 919400 -6.31% IMAB Stock Predictions
RXT 4.35 4.39 4.07 4.08 1698000 -6.42% RXT Stock Predictions
HOWL 4.78 4.78 4.51 4.51 24800 -6.63% HOWL Stock Predictions
PTRA 5.29 5.35 4.97 4.98 1184500 -6.74% PTRA Stock Predictions
SHPH 4.87 5.18 4.57 4.59 668600 -6.90% SHPH Stock Predictions
NVTS 5.19 5.32 4.82 4.85 1094000 -8.14% NVTS Stock Predictions
RAIN 5.70 5.70 4.79 4.88 66400 -13.32% RAIN Stock Predictions
OCUL 5.06 5.28 4.15 4.15 3174500 -19.10% OCUL Stock Predictions

How to trade stocks under $5?

There are various ways to trade stocks under $5, such as the breakout trading strategy and the pullback strategy that we will be discussing below.

To make money from trading, we will be utilizing technical analysis and stock chart patterns to swing trade in the stock market. If you are new to trading, you may want to read the following articles.
How to Read a Stock Chart Top 10 Stock Chart Patterns Introducing Technical Analysis
The tools that we will be using are stock charts and the strategies are as follows. Oftentimes, when a stock makes a massive move and then falls over 60-80%, there is a possibility that the stock may make smaller bounces before falling again.

The trick is to buy into one of these stocks before the second bounce. Especially, here's the trading strategy that we will be using.


Trading Strategy

We've already discussed this low cap strategy in detail in the article Penny Stocks Trading Strategy. In summary, here's what the trading strategy does.

  • Low Price - We will look for stocks trading in the range of $0.8 to $5 on NASDAQ, NYSE, or AMEX. We are not interested in stocks trading on the OTCBB market.
  • Big Rally - The stock must be up at least 80% recently, with a single spike of 30% or more in 1 day. The trading volume must be huge compared to the average trading volume of the stock.
  • Plunge - The stock then falls over 40% from its peak close or 65% from the intraday high with low trading volume.


Here are three recent stock patterns that matched the criteria. All three stocks were taken from November 4, 2020.

If we look at the stock charts of the above stocks which met all of our trading criteria, the big rise, and fall, we see that all the stocks made decent moves after that pattern occurred.

Our goal is not to make money from the initial big rise, but to make money after the big fall because there is no pattern that I can find that predicts the first rise.


Stop Loss

Please note that not all stocks are going to perform that well and bounce in a week or two. Most of the time, the stocks either don't move or may even drop further.

During those times, we must cut our losses short and move on to the next trade. The reason most stock market beginners lose money in the stock market is that they never cut losses short. They always allow the losses to pile up and cut their profits too quickly.

The pattern that we showed above doesn't work all the time. In fact, it doesn't work at all when the general market is down. Therefore, we must protect ourselves with tight stop losses. That way, when we lose, we lose small. When we win, we win big.




Profit Target

Just like a stop loss, we also need a profit target. Without a proper profit-taking strategy, you may give up most of your gains back to the market. Here are a few strategies that you may test and see which one works the best for you, or you can come up with your own profit-taking strategy.

In general, you want to have a target price that gives you at least a 1:2 risk-reward ratio, meaning if you are risking $1 on a trade, your trade should have the potential to make $2.

  • Target price - you can set a target price at the next resistance level assuming the target price gives you the proper risk-reward ratio.
  • Percent - you can set a percentage gain target. For example, if your stop loss is 10%, your profit target might be 20%.
  • Let your profit run - you can have your whole position on and let the profits run until the stock pulls back. The problem with this strategy is that you could give up most of your gains.
  • Exit partially - you can have multiple target prices. As soon as the stock hits your first profit target, sell half your position. When the stock hits your next profit target level, exit the rest of the position. To protect your profit, you should move up the stop loss from your initial entry point as the stock goes higher.

Position Size

Position size is always important in any trade. Many beginners have a position size that is too large that could wipe them out in one bad trade.

Remember, no matter how good a pattern looks or how good a trade setup appears to be, there is still a chance that it may fail. If we lose a lot of money on one trade, not only would it crush our confidence in trading, but it would also ruin our account.

Therefore, the goal of trading is not to make a lot of money on any one trade and get rich quickly. The goal is to get rich slowly making thousands of trades in the long term.

The position size of any trade should be less than 10% of your account size, preferably 5%. On top of that, you should have stop loss with any trade you enter, so that you will be risking less than 2% on any trade relative to the size of your portfolio.


Market Direction

When the market is bullish, you will see a lot of stocks making big moves, and your trades are working out nicely.

On the other hand, when the market is bearish, you may not find any stocks to trade or the trades just don't work. In that case, you should stay out of the market. It could be a few days, a few weeks, or even several months.

Most of us have no way to predict the market direction, but we do know whether we are winning or losing.

The goal of trading is to make money, if you are starting to lose money, there is no point to be in the market.

However, many beginners do the exact opposite. When they lose money, they start to increase their position size trying to make the money that they just lost. This is called revenge trading, and it is very dangerous.

When traders start to trade with their emotions instead of logic, they are on their way to donating their money to the market.




Trading Psychology

Psychology is critical for trading success, yet is ignored by most beginner traders. To me, trading psychology is more important than any strategy.

You may have a trading strategy that works 80% of the time but without the mental discipline to keep yourself from losing most of your money on the other 20%, you will still end up a loser.

A sound trading strategy without knowing anything about trading psychology is not enough to be the market. One may have the best strategy in the world, but if he fails to execute trades at the right time is going to lose money.

When we look at the stock charts and technical analysis without investing any money, we all can think logically.

However, as soon as we have our money loaded on the stocks, we act differently. All of our thinking may be based on how much we would make or lose on a trade instead of focusing on the pattern itself.

We should treat the stock market calmly and if we are confident with our trading decisions and system, we will make money. On the other hand, if our decisions are based on fear and greed, we will lose money.


Learn From Your Mistake

It's important to learn from your own mistakes or the mistakes of others. Then come up with a set of rules that you should follow for every trade.

You can modify your rules as you gain more experience. However, don't change your rule while you are already in a trade.

For example, if you have a rule that says you must cut your loss at 10% for all trades. And you already have a stock that is going against you with a 10% loss. You cannot move your stop loss lower in order to stay in the trade, you must cut the loss and move on.

If you find a 10% loss is not the optimal stop loss for your trading strategy, you can modify your rule to set the stop loss at 8% or even 12%. But you can only do that after a trade is over, and the rules that you set should be based on your experience.


Keep a Trading Journal

Most successful traders keep a trading journal that tracks all of their trades. A trading journal allows them to go back and study their past trades and find the flaws in their trading system.

Tracking and improving are necessary for traders to stay in this game for the long run. You don't see beginners do that because they are always trying to find a magic stock that would make them rich. Unfortunately, the stock market is not a place where you can make quick money.

Keep a trading journal if you are serious about trading and making money from the market. If you can find a few mistakes in your trading system and improve it, it could translate into cash.

Treat trading as a business, not a hobby. A trading journal should track at least the following.

  • The entry price
  • Position size - record how many shares you buy and how much you are trading with.
  • The reason for entry
  • The strategy - If you have multiple trading strategies, you should log the strategy that you are using.
  • The entry stock charts - you can attach the weekly, daily, or intraday chart depending on the time frame that you trade with
  • The market sentiment - you can log the Dow and NASDAQ, this gives you an idea of whether the market is bullish or bearish when you enter the trade. When the general market is in panic, it is hard to make money going long.
  • The exit price
  • The reason for exit
  • The exit stock charts - you should include the charts when you exit the trade.
  • The market sentiment - is the Dow and NASDAQ up or down when you exit the trade?
  • The profit/loss - how much did you make or lose on this trade in terms of percentage.

You can add or remove items from this list to fit your own trading style.




What stock can I buy for $5?

There are many stocks under $5 that are worth watching for traders with a small account. Let's face it, one share of Amazon stock costs over $3,000. If you have only $2,000 to invest, you cannot even purchase one share of Amazon stock.

That is not to say Amazon stock is not a good stock, or you shouldn't be buying high-priced stocks. In fact, it's the exact opposite. Expensive stocks are trading at high prices for a good reason, they are usually better, safer, and have more potential to grow over the long term.

These companies usually have stronger fundamentals, product lines that are not easily replicated by others, a great leadership team, and loyal fans of their products. All of these mean the company is making tons of money with excellent income statements and balance sheets.

However, for small traders with limited funds, you may consider stocks that are trading under $5. Some of these stocks may go up much faster than the blue-chip stocks. It is much harder for stocks trading at $100 to double up to $200, but a $5 stock may go up to $10 in a much shorter period of time.

Of course, buying stocks under $5 is much riskier, because companies with a stock price of $5 or lower generally don't do well at the moment. The odds of these low-price stocks going bankrupt in the long term are much higher than the possibility of doubling up.

For this reason, we are not interested in investing in these low-price stocks, these are stocks to be traded for the short term. If we buy any of the stocks, we usually sell them in a short time frame, anywhere from a couple of days to a few weeks maximum.


How to Find Hot Stocks Under $5

You can use our free stock screener to scan for hot stocks under $5. Our stock screener gives you the option to scan for popular technical indicators and find stocks that match these patterns.

Some of the technical indicators that you scan for are price and volume actions, moving averages, candlestick patterns, stochastic oscillators, RSI, MACD, and many more.

You can read the following article on how to use our stock screener and find stocks for swing trading.

How to Find Stocks For Swing Trading



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