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Penny stocks are the stocks of companies with a market capitalization or market cap, of less than $1 billion. A company's market cap is a measure of its total market value. It is determined simply by multiplying the price of a share of stock by the total number of shares out in the market (outstanding shares) Most often, the relatively low market cap that penny stocks have is due to a low price per share (PPS for short). Since it is a "small" market capitalization, penny stocks are also referred to as 'Small-Caps'.
There are even 'Sub-Penny' stocks, that trade as low as .0001 dollars (one one-hundredth of a penny!). A stock that trades at .0009 or less is referred to as a "trip-zero" penny stock (click the link for much more info on trading trip-zero's). Stocks that are priced this low are often referred to as 'Micro-Cap' or 'Nano-Cap', with market caps of less than 250 and 50 million dollars respectively. disclaimer |
Penny stocks are the fast movers of the stock market. While large stocks such as IBM and Microsoft lumber along like the giants that they are, penny stocks often race around like Ferraris. Think of it this way, for you to double your money in a $30 stock, it must go all the way to $60. To double that same money in a stock that is $.01, it must only gain one cent to get to $.02...
If the $30 company doubles, its market value rises by 3 billion dollars! For the $.01 company to double, its market value must only rise by $100,000. Essentially, the expensive stock requires much much more money input for the price to move. This is why penny stocks can move so quickly, and make you a profit in very little time. disclaimer |
Momentum Trading is a strategy many traders use to profit from stocks that are moving quickly, and on high volume in one direction. With penny stocks, traders play on upward momentum, since penny stocks are not generally available for short sales. Stocks gain momentum because of buzz; expected news, filings, or rumors. To find stocks with this “buzz”, a momentum trader reads message boards or forums. One can usually find several stocks getting a lot of attention, a sign that traders will be playing the stock heavily in hopes to drive the price in one direction, news releases and speculation are a big part of momentum trading.
We at penny stock momentum specialize in finding these momo plays and bringing them to you before the rest of the crowd. We scan news, filings, and charts all day looking for the next big play! Momentum trading and penny stock trading is risky, please view are disclaimer for the detailed risks. disclaimer |
Example of a momentum chart
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