Are you looking for the best penny stocks to buy now? Today might be your day…or not. These high-flying, low-priced stocks are well known for their innate ability to explode within a matter of minutes at times.

Imagine seeing a stock that trades for pennies on the dollar move less than $0.50 and score a 100% gain or more before lunch. It’s not science fiction; it’s trading penny stocks. Occurrences of scenarios like the one I just explained are not uncommon. But you need to understand the basics of trading, how to manage risk, and develop a trading style built for such volatility.

How To Trade Penny Stocks: A Brief Primer

Penny stocks are defined as stocks that trade for under $5 per share. They are typically issued by small companies that are not traded on major exchanges. The low price attracts investors looking for stocks that could see large percentage gains.

Pile of pennies and coins in the shape of an upward arrow illustrates the growth potential of penny stocks

However, penny stocks are extremely volatile. Their prices fluctuate wildly and spreads between bid and ask prices are wide. Trading volumes are lower, making entering and exiting trades challenging. But that doesn’t mean they aren’t worth trading if you know what you’re doing.

Researching Penny Stocks Before Investing

Thorough research is crucial before investing in any penny stocks. Look at the company’s financial statements, operations, and recent news. Search for analyst coverage and reports if they exist. Check investor forums and social media to gauge current sentiment. This helps avoid buying into potential pump-and-dump schemes or companies already in decline.

Starting with Paper Trading

Begin by paper trading imaginary penny stock purchases. Track how your simulated trades would perform without risking real money. Open a practice trading account with an online broker to experience the real market action first-hand. This lets you learn the ropes before using actual capital.

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Beginning to Trade with Real Money

When ready to trade real money, start very small. Only invest what you can afford to lose entirely. Limit penny stock positions to a maximum of 5% of your overall portfolio. Use stop losses on all trades to restrict potential losses. Focus on stocks with daily trading volumes above 500,000 shares for better liquidity. Monitor bid-ask spreads and use limit orders for better trade execution.

Staying Up to Date on Stocks You Own

Keep up with latest news, SEC filings, and developments related to stocks you own or are interested in. Set price alerts and follow stock message boards and social media feeds. Negative rumors or bad news can quickly tank penny stocks. Identify positive catalysts driving price spikes to find ideal entry points.

news penny stocks

Finding Penny Stocks with Momentum

Search for penny stocks breaking out to new 52-week highs on heavy trading volume. This signals upside momentum. Screen for stocks with earnings growth, analyst upgrades, or other improving fundamentals. Technical analysis can also help identify bullish chart patterns about to break out. Focus on quality companies in higher OTC Market tiers.

Using Caution and Limiting Risks

In summary, limit penny stock positions to a small portion of invested capital due to the substantial risks involved. Use stop losses, limit orders, paper trading, and small position sizes to minimize downside. With caution, penny stocks can provide opportunities for short-term gains as part of a diversified portfolio.

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Virgin Galactic Holdings (SPCE)

Space stocks were once a popular topic, but the trend cooled off significantly with the shift in market sentiment. The latest risk-on environment, however, has brought interest back to companies in the niche. Virgin Galactic most notably has taken an appeal from investors as the company continues launching civilians into space.

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Earlier this month, the company completed its fifth successful human space mission in the last five months. Michael Colglazier, CEO of Virgin Galactic, said: “Our teams in New Mexico and California have delivered on our monthly spaceflight objectives. Three new astronauts journeyed to space today and brought back incredible memories and stories of their experience above the Earth. These early missions with our initial ship, VSS Unity, have informed and confirmed the design and maintenance objectives for our Delta class spaceships, and the production tooling for those ships is on track to commence later in the fourth quarter.”

This week, as the market has risen, so have shares of SPCE stock. While it’s a positive for the company following a long stint of selling, Virgin is still hovering around 52-week lows.

bluebird bio Inc. (BLUE)

Earnings season is in full swing and showing the true colors of the companies reporting. bluebird bio will be reporting in a few weeks. In its last financial update, the company beat EPS estimates but missed on sales expectations. bluebird said that its commercial launch of ZYNTEGLO and SKYSONA remained strong and that a Biologics License Application for its lovo-cel in sickle cell disease was accepted for priority review by the FDA.

Andrew Obenshain, chief executive officer, bluebird bio commented, “Additionally, with the ongoing FDA review of lovo-cel and potential approval by the end of this year, bluebird is preparing for our largest opportunity yet to impact the lives of patients and families – a gene therapy for individuals living with sickle cell disease in the US.”

The FDA communicated in August that an advisory committee meeting will not be scheduled for lovo-cel gene therapy for sickle cell disease. The Agency previously accepted the lovo-cel Biologics Licensing Application (BLA) for Priority Review and set a Prescription Drug User Fee Act (PDUFA) goal date of December 20, 2023. In the interim, analysts have also begun picking up more coverage on BLUE stock. This week Cantor Fitzgerald initiated coverage with a Neutral rating. Last month HSBC initiated coverage with a Buy rating and set a BLUE stock forecast price target of $4.21.

EQRx Inc. (EQRX)

Shares of EQRx continue rising, thanks to acquisition news. The company is developing a platform to tackle some of the most prevalent disease areas, including candidates for breast cancer. It also has announced M&A developments in the works.

The company and Revolution Medicines, Inc. (NASDAQ: RVMD) announced a definitive agreement. The all-stock transaction is expected to add more than $1 billion in net cash to Revolution Medicines’ balance sheet.

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In an update, Melanie Nallicheri, president and chief executive officer of EQRx, explained, “With its pioneering portfolio of RAS(ON) inhibitors, designed to defeat RAS-addicted cancers which represent 30% of all human cancers, Revolution Medicines has the opportunity to address one of the largest areas of unmet need in oncology. Deploying our significant capital not only enhances this important vision, it also provides a compelling opportunity for our stockholders to participate in the upside potential of both near-term and long-term value catalysts.”

The deal is expected to close in November. As the date nears, so does speculative momentum in EQRX stock.

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