3 Things to Know About Buying Penny Stocks in August
Buying penny stocks in 2021 is challenging to say the least. With Covid and long-term inflation in full swing, investors are still working out how to trade penny stocks right now. For starters, one of the most important aspects to consider in August is the impact of the Delta variant. Right now, this Covid variant has many investors concerned about the future. However, we can use the U.K. as an example of a best-case scenario.
In the United Kingdom, case numbers spiked dramatically over the course of the past few weeks. However, in the past three days or so, case numbers have begun to decline just as quickly. Many scientists attribute this to the success of the vaccine and potential herd immunity, however, it is still largely unknown.
If the U.S. can follow a similar path, it could be a major positive for the future of Covid globally. In addition to this, many investors are fearful about inflation in both the long and short term. This is a more or less warranted fear, as the price of goods such as lumber is skyrocketing right now. So, considering all of this, let’s take a look at three things to know about buying penny stocks in August 2021.
What to Know About Buying and Selling Penny Stocks in 2021
- Which Industries Are Penny Stocks Investors Watching?
- What to Look Out For In The Next Few Months
- Strategies to Use for Trading Penny Stocks in August
Which Industries Are Penny Stocks Investors Watching?
Biotech Penny Stocks
Biotech penny stocks are some of the most popular stocks to watch right now. This includes leaders like Enzolytics Inc. (OTC: ENZC), Onconova Therapeutics Inc. (NASDAQ: ONTX), and Jaguar Health Inc. (NASDAQ: JAGX).
While the momentum with biotech stocks began as a focus on those producing Covid vaccines or treatments, it quickly shifted to any promising biotech companies in the overall industry. As always, use research as the basis for finding the best biotech penny stocks to buy.
Tech Penny Stocks
Another sector that has been booming over the past year and a half has been tech. This includes penny stocks such as Globalstar Inc. (NYSE: GSAT), SOS Ltd. (NYSE: SOS), and many more. With so many tech penny stocks to choose from, there are a few things that investors should look out for.
First, understand what the company does and what its role is in the overall tech industry. Second, consider how much funding it has and whether its business model can remain profitable in the future. These two pieces of advice alone can help to determine whether a tech penny stock is worth watching or not.
In addition to this, consider the less popular areas of the industry such as blockchain penny stocks and 5G penny stocks. Both of these have increased in investor attention in the past few months and could be worth looking into.
What to Look Out For In The Next Few Months
Over the next few months, there are some key things that investors should keep track of. As stated earlier, the trajectory of Covid is one of the most important aspects currently going on with penny stocks. When news is announced, both blue chips and small caps will often move in one direction or another. And because of this, many investors choose to stay up to date with all the latest events.
In addition to considering case numbers in the U.S., traders should watch for case jumps in other countries as this can have a massive effect on a wide range of penny stocks. Outside of Covid, inflation and geopolitical events are the other two factors waging a war on profitability. While inflation is expected, certain geopolitical events are going on in the world that could result in moves made in the stock market.
Most investors choose to watch the news daily and keep up to date with all the latest happenings. And to be the best, investors should all try to stay as informed as possible. So, while 2021 is a difficult year to be trading penny stocks, making a profit can be accomplished regardless.
Strategies to Use for Trading Penny Stocks in August
While the best strategy will always be understanding which industries may take off in the future, there are some other things to take note of. Right now, there is a great deal of volatility in the stock market. Unlike other years prior, the current world situation has resulted in a difficult to predict market environment. But, with volatility, there is a great deal of opportunity to be had. When it comes to investing in penny stocks there are two overall strategies.
On one hand, we have long-term traders. These are investors that look for low-priced potentially valuable penny stocks to buy, hoping that they will move out of penny stocks territory. This can be a good strategy if you understand the underlying business model and the potential of the company to push above the $5 level.
On the other hand, we have traders who look for short-term value. This is otherwise known as swing trading. These are traders that make intraday moves on stocks, hoping to benefit from short-term volatility. Both of these strategies can be valuable, however, investors need to know what type of trader they are.
In addition to this, never let FOMO get in the way of your investing strategy. FOMO or the fear of missing out is essentially attempting to make profits after a stock has already shot up in value. This will almost always result in losses, and big ones at that. So, know what trader you are and use that to your advantage.
Are Penny Stocks Worth It in 2021?
Buying penny stocks in 2021 has been challenging to say the least. With arguably more going on in the market right now than in many years prior, it can be difficult to make money with penny stocks right now. However, with the right strategy on hand and a commitment to understanding how to trade, it can be done with relative ease. So, with all of this in mind, do you think that penny stocks are worth it in 2021?