3 Tips and Tricks for Trading Penny Stocks This Month
When you’re thinking about buying penny stocks, it’s important to understand what stocks are, how the stock market works, and what factors are impacting the stock market right now. For starters, penny stocks are stocks that trade on public exchanges for less than $5 or less per share.
Many people invest in penny stocks because they believe that these stocks have the potential to appreciate significantly in value. And on the other hand, some choose to trade penny stocks due to the large and frequent moves that they make during intraday trading. However, penny stocks also tend to be riskier than blue chips due to the low price and the high volatility that they face. So, it is crucial to understand your risk tolerance and investment goals before investing in penny stocks.
What to Know About Trading Penny Stocks Right Now
One of the most important factors to understand about penny stocks is that they tend to be more speculative and reactive than any other stocks. This means that news, announcements, and events, are likely to have a major and material effect on how they trade. For example, a company that is announcing good news may see its stock prices jump significantly, while a company that is releasing negative news will likely see its stock prices fall.
While this may seem obvious, the important thing here is to stay as up to date as possible with everything that is going on in the market. This includes events that are impacting the penny stocks you’re investing in, and those that will have a broader effect as well.
The stock market is constantly changing, and it’s important to be aware of the current conditions before investing. So, know what your goals are, know what’s going on in the stock market, and know how to take advantage. With that in mind, let’s take a look at three things every trader needs to know about trading in April 2022.
3 Things Every Penny Stocks Trader Should Know About April 2022
- Picking a Penny Stocks Trading Strategy
- What is Going on in the Stock Market Right Now
- Trending Industries to Watch in April
Picking a Penny Stocks Trading Strategy
Swing trading/day trading is when you purchase penny stocks with the intention of selling them within a short period of time, usually a few hours or days. This type of investing is risky, but can be profitable if you’re able to buy stocks at a low price and sell them at a higher price. Swing trading is extremely common with penny stocks as their volatility lends itself to short term investing. While some do choose to long term invest, most that buy and sell penny stocks, do so with the intention of holding for a short time frame.
Long term investing is when you purchase penny stocks with the intention of holding them for a longer period of time, typically months or years. This type of investing is less risky than swing trading/day trading, but also offers less potential for quick profits. Some people who invest in penny stocks choose to do so through long term investing, as it’s a more conservative strategy that can still net profit in the long run. However, given the frequency at which penny stocks move, this can be a risky way to invest.
What is Going on in the Stock Market Right Now
Right now, there are two main factors that are at play in the stock market. On one hand, we have the constant tension and war going on in Ukraine. This has resulted in major sanctions on the Russian economy, an increase in U.S. oil production and the release of oil reserves domestically. In addition, there are many other ways in which these sanctions have affected the global economy. But all in all, this event has caused major volatility in the stock market at large.
On the other hand, we have rising inflation and the Federal Reserve working to tighten its monetary policy to combat it. This has resulted in rising interest rates, which has also caused a great deal of fear in the market. Now, this was and is expected and is not a major cause for concern. However, it is definitely a factor to keep at top of mind. While these are not the only events you need to know when it comes to trading penny stocks in April, they are the key events at play right now.
Trending Industries to Watch in April
Because of the events mentioned above, there are several industries that investors are focused on right now. At the top, we have mining stocks. These have come into focus as investors look to safeguard their investments through precious metals. We often see this when large geopolitical events are at play as precious metals tend to climb when there is turmoil at play.
Next on the list, we have defense stocks. This is an obvious choice as conflict in Ukraine has continued to rise in the past several weeks. While tension is at a standstill right now, defense stocks are definitely still on many investors watchlists.
Lastly, due to the pandemic still going on, many investors are focused on biotech stocks. While we are not seeing the same amount of hype that we witnessed last year and the year prior, there’s no doubting the excitement that still exists in the biotech industry.
3 Penny Stocks to Watch This Month
- Camber Energy Inc. (NYSE: CEI)
- Clovis Oncology Inc. (NASDAQ: CLVS)
- Hudson Capital Corp. (NASDAQ: HUSN)
Which Penny Stocks Are You Watching in April 2022?
If you’re looking for the best penny stocks to buy in 2022, there are plenty of options to choose from. Now, it may seem easy to find penny stocks that are worth buying, but it takes a keen eye and a thorough understanding of the stock market, to understand which could make you money. Considering all of this, which penny stocks are you watching in April 2022?