What are penny stocks? Based on the standard definition, we’re talking about stocks under $5. But obviously, there’s more to it than just price, right? Looking for cheap stocks to buy might seem like an easy task. Just find a list of stocks under $5 and find one that has a good looking name.
While that might seem like a good strategy to some, there’s more to it than just price, alone. If you’re day trading penny stocks, you’ll want to focus on things like technical analysis and event-driven catalysts. The goal is capitalizing on short-term moves in price for max-gain. The idea of a “long-term” hold entails hanging onto a position for a day at most.
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When it comes to swing trading penny stocks, the strategy is similar but the holding period is a bit longer. Traders don’t only look at short-term catalysts but also any upcoming or fundamental events as well. Look at things like biotech penny stocks. So many end up pre-announcing specific dates at a future time.
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