Go to the list of all blogs
Sergey Savastiouk's Avatar
published in Blogs
Mar 14, 2023

How to Start Trading Penny Stocks

Penny stocks have been unfairly dismissed by the investment community as being overly risky, often due to negative stereotypes perpetuated by media portrayals like Leonardo DiCaprio's character in The Wolf of Wall Street. However, it's important to recognize that not all penny stocks are created equal and that many of them have the potential to generate substantial returns at a low cost. To trade penny stocks successfully, one must conduct thorough research, possess shrewd trading abilities, and gain experience through practice. With this in mind, here are four compelling reasons to consider trading penny stocks.

Reason #1: Penny Stocks are Affordable

It's no secret that high-profile stocks like Apple, Google, and Tesla can cost hundreds or even thousands of dollars per share. This means that traders would need a considerable amount of money to see significant returns. In contrast, penny stocks are a more affordable option, although they come with higher risks and potential for greater returns.

Consider this: with $1,000, you could purchase a single share of Tesla. To make a 50% profit of $500, Tesla would need to rise to $1,500, which could take a while. Alternatively, with that same $1,000, you could purchase over 600 shares of a penny stock trading at $1.50 per share. If that penny stock jumped to $2 per share, you would make the same $500 profit. A 50 cent increase could even happen in a single day.

Reason #2: Researching Penny Stocks is Possible

It's true that penny stocks are often associated with small-cap companies with limited financial information and management history. This can make it difficult for traders to conduct thorough due diligence. However, there are tools available to help evaluate penny stock companies.

Tickeron, for example, has developed a range of fundamental analysis metrics for assessing different types of stocks, including penny stocks. The best part is that artificial intelligence (AI) is used to conduct this analysis automatically.

To access Tickeron's tools, simply go to the Screener Home page on their website, select Penny Stocks, and review the range of fundamental analysis metrics powered by AI.

Tickeron's fundamental analysis goes beyond the simplistic use of P/E ratios or price-to-sales ratios. Using algorithms, Tickeron conducts more insightful analysis.

The Outlook Rating is generated by analyzing the ratio of advancing to declining daily volume from the past month.

The Valuation Rating is based on a proprietary formula that takes into account a set of traditional fundamentals and generates an AI-estimated price per share for the company. This estimate is then compared to the current stock price, determining whether the stock is overvalued or undervalued. A rating of 1 indicates that the stock is significantly undervalued according to Tickeron's AI.

The Profit vs Risk Rating evaluates a company's performance by considering the balance between profit, volatility, and drawdown.

The SMR (Sales, Margin, Return on Equity) Rating is based on a comparative analysis of weighted sales, income margin, and return on equity values in comparison to S&P 500 index constituents. The proprietary weighted SMR value helps identify companies with strong and profitable business models.

The Price Growth Strength Rating is based on a comparative analysis of stock price increases or decreases over the last twelve months in comparison to S&P 500 index constituents. Short-term positions are determined by ranking price changes over a period of 1 or 3 months, while long-term positions track price changes over 6 or 12 months. A rating of 1 points to the highest price growth, while a rating of 100 indicates the lowest price growth.

Finally, the P/E Growth Rating is based on a comparative analysis of a stock's P/E ratio increase over the last twelve months in comparison to S&P 500 index constituents. A rating of 1 indicates the highest P/E growth, while a rating of 100 indicates the lowest P/E growth.

Tickeron's AI runs an entire range of technical analysis indicators, including patterns and common indicators such as Bollinger Bands, Moving Averages, and Stochastics. Traders can utilize all of these tools on Tickeron's Screener to evaluate stocks and/or sort them by their preferred fundamental or technical analysis indicators.

Researching penny stocks is no longer a challenging task with Tickeron's innovative approach.

Reason #3: Embrace Volatility as Your Ally

While it's true that penny stocks can be highly volatile, this volatility can often work in a trader's favor. In fact, volatility is frequently seen as a trader's closest ally.

To illustrate this point, we used Screener Home to select Penny Stocks and sorted them by daily volume, seeking penny stocks with significant volume over the past month. The following snapshot shows what Tickeron's A.I. generated:

Over the past month, several penny stocks have experienced significant price fluctuations, with some ranging from -90.9% to +135.45%. Because penny stocks have low prices, small changes can result in significant gains or losses for traders, whether they are buying or selling. As a result, traders must scrutinize numerous data points and cross-reference them with various indicators (both fundamental and technical), as well as leverage volatility to their advantage. Tickeron offers the necessary tools to achieve this goal. 

Reason #4: Practice Trading Penny Stocks Risk-Free

At Tickeron, both novice and seasoned traders can practice trading penny stocks without the risk of real money through our "Paper Trading" feature. This tool enables traders to experiment with our proprietary indicators and artificial intelligence and formulate a trading strategy that suits their personal style. You can easily access this feature by visiting the Tickeron Home Page and clicking on "My Paper Trades" to create a portfolio consisting of stocks, ETFs, or mutual funds and monitor your progress over time.

If you're new to Tickeron, they have an introductory 2-minute video tutorial on how to create and manage a 'virtual portfolio' in just a few simple steps. Additionally, while using Tickeron's Screener to explore trading opportunities and assess various penny stocks, you'll notice a "Paper Trades" icon next to each ticker name, enabling you to effortlessly add the selected stock to your online portfolio.

Penny Stocks: A Risky Investment, But with Trading Tools You Can Minimize the Risk

Investing in penny stocks can be riskier than investing in major stocks traded on big exchanges like the Nasdaq and NYSE. However, with proper research, due diligence, and trading tools, you can navigate the penny stock market and potentially reap substantial profits.

Before jumping into the penny stock market, it's wise to develop a sound trading strategy and gain experience through practice. Tickeron's Paper Trading feature enables investors and traders to build hypothetical portfolios and make trades using the platform's fundamental and technical analysis indicators. With time, you can refine your strategy, determine which indicators work best for you, and even identify specific penny stocks to target for trading.

It's important to note that trading penny stocks isn't suitable for everyone, and as previously mentioned, it's a high-risk investment with the potential for significant gains or losses. However, if you're prepared to take on the risks, it's crucial to use as many tools as possible to inform your trades. Tickeron provides a range of tools to help you make informed decisions and minimize your risk in the penny stock market.

Tickeron's Products

The main idea behind technical analysis is the ability to find recurring price patterns and trends and use them to predict the direction of future market trends. We started with the creation of AI-based Engines (Pattern Search Engine, Real-Time Patterns, Trend Prediction Engine) that allow us to effectively analyze market trends.  We then have explored almost all existing methods (price patterns, trend indicators, oscillators, and many others) using neural networks and deep historical backtests. As a result, it was possible to form a pool of trading algorithms that together allow our AI Robots to effectively determine the key points of change in market trends.

Ad is loading...
Discover the dynamic world of cryptocurrency trading with Tickeron's AI analysis. Capitalize on bullish and bearish patterns in Origin Protocol (OGN.X), with gains up to 27.80%. Stay ahead with Tickeron's real-time insights and make informed trading decisions. #CryptoTrading #AIAnalysis #OriginProtocol #InvestSmart
Dive into the world of trading excellence with our Best AI Robot of the week! In a market characterized by growth, the key to maximizing profits lies not only in mainstream large-cap stocks but also in exploring opportunities across different market segments.
This article delves into the performance of AI trading robots, specifically those utilizing the "Swing trader: Long-Short Equity Strategy (TA&FA)." These bots showcased their prowess by delivering a notable +4.98% gain while engaging in MRNA trades over the previous week. Beyond mere statistics, we explore the technical indicators and recent earnings report of MRNA to shed light on the underlying dynamics influencing the stock.
Artificial intelligence (AI) trading bots have become powerful tools for investors seeking active trading opportunities. In a recent analysis conducted on the "Day Trader: High Volatility Stocks for Active Trading (TA&FA)" platform, AI trading bots exhibited impressive performance, generating a noteworthy +4.81% gain while actively trading Shopify (SHOP) over the course of the previous week.
In the dynamic world of finance, strategic asset acquisition is a game-changer. Recently, a group of stocks within this domain has been in the spotlight, showcasing notable performances and intriguing patterns. This article delves into the recent movements of these stocks, focusing on key indicators, market capitalization, notable price events, and volume dynamics.
The Tickeron quant team is delighted to introduce our best robot of the week tailored for Trend Traders. Our sophisticated AI Robot, has been designed for manual trading enthusiasts who value independent signal selection.
Tickeron's Quant team is delighted to introduce our latest AI-powered robot designed for trading small-cap stocks, employing a distinctive fundamental stock analysis algorithm. This algorithm, renowned for its blend of in-depth analysis and intuitive signal-following capabilities, is well-suited for both novice and seasoned traders.
The Tickeron quant team proudly presents our top-performing AI robot for swing traders. This robot stands out with its remarkable accuracy, empowering traders to capitalize on diverse market conditions and transaction types. Demonstrating its proficiency, it achieved profitability in short trades during last week's strong uptrend in the US stock markets.
One such example is the "Trend Trader: Popular Stocks (TA&FA)" platform, where AI trading robots demonstrated their prowess by generating a notable gain while actively trading Adobe Inc. (ADBE) over the previous week. In this article, we delve into a technical analysis of ADBE's recent performance, shedding light on key indicators and recent earnings results.
​​​​​​​The railroads sector, encompassing prominent players such as Canadian Pacific Railway (CP), CSX Corporation (CSX), Norfolk Southern Corporation (NSC), Canadian National Railway Company (CNI), and Union Pacific Corporation (UNP), has undergone a noteworthy surge in performance over the past week. However, a closer examination reveals a complex landscape marked by negative outlook signals and fluctuating market dynamics.
The Tickeron quant team is excited to introduce our premier AI robot, specifically optimized for Swing Traders. This tool represents the pinnacle of our technological advancements in trading algorithms. Excelling in the market, it has achieved an impressive feat, earning twice as much as the S&P 500 in just the past week.
In the whirlwind of the current mergers and acquisitions frenzy, investors are reaping substantial rewards as stocks within the merger industry theme surged by an impressive 20.9% on average over the past month.
The Tickeron quant team is delighted to introduce our top-performing AI robot tailored for beginners. Our AI Robot specializes in navigating the high-tech stocks within the NASDAQ 100 index, renowned for their liquidity and moderate volatility—making them an ideal choice for novice traders.
In the dynamic landscape of the US stock markets, where unpredictability has become the norm, finding a trading strategy that not only thrives in periods of growth but also shields against sharp corrections is paramount.
The Tickeron quant team proudly introduces our premier AI Robot, tailor-made for trend traders who prefer manual trading and selecting their own signals. This AI Robot stands out with its impressive track record of consistent trading predictions, empowering traders to align their decisions with personal preferences.
Tickeron is excited to highlight the exceptional performance of our top AI robot this week, given the recent downturn in major US stock indices. While the SP500, NASDAQ 100, and Dow Jones Industrial all experienced declines, our AI robot, thanks to its well-calibrated diversification across various industries, demonstrated remarkable resilience.
As the trading week came to a close on Friday, there were notable movements across various asset classes:
Tickeron's quant team diligently monitors developed trading algorithms daily to determine the most effective ones. Today, we are delighted to present three of the best robots tailored for swing traders, showcasing consistently positive results over several months, irrespective of market conditions. This week, they underscored their efficacy by yielding impressive gains across various stocks, even as major US stock indexes dipped.
Tickeron is excited to highlight the exceptional performance of our top AI robot this week. The US stock market has experienced a consistent upward trend for the past five months, heightening the anticipation of a forthcoming correction with each passing day.
Introducing our top-performing best AI Robot of the week, designed by Tickeron's expert quant team for trading small-cap stocks. This algorithm blends classical and proprietary technical indicators, honed through advanced machine learning, to empower users with effective portfolio diversification and maximum profitability in the dynamic market.