When trading penny stocks, it is important that you have a stock screener that can find you stocks to watch quickly. You want to focus all your attention on your stocks and learning rather than spending a lot time finding stocks manually.
A good stock screener allows you to scan the stock market and find stocks that match your trading criteria quickly. Your trading criteria will likely be based on technical analysis and chart patterns. By using a stock screener, you narrow down your penny stock watchlist to only a few stocks rather than hundreds of them.
Here is a list of trading setups that I use when I search for penny stocks.
1. Price Screener – Since I’m only interested in penny stocks, I need to be able to scan for stocks base on price. I want to only find stocks that are trading under $5.
2. Volume Screener – Volume is an extremely important indicator in technical analysis and penny stock trading. The more trading volume of a stock, the stronger the signal. I only trade penny stocks with a daily volume of at least 1,000,000. The problem with low volume stocks is sometimes it is hard to find a seller when you want to sell your stocks and you end up paying a big slippage fee. Also, more volume indicates that there are a lot people interested in the stock and constantly trading, and technical analysis and chart pattern work better.
3. Candlestick Patterns – Candlestick patterns are powerful charting techniques that you can use to find trade setups. It is originally from Japan and now widely used by traders around the world. My favorite candlestick patterns are Bullish Engulfing and the Doji pattern.
4. MACD Indicator – MACD is a popular technical indicator and when MACD crossover, it generates a buying signal.
5. RSI Indicator – I use RSI to find stocks that are oversold and overbought
There are many more other technical indicators and chart patterns that you can use for finding trade setups. You should experience with all the different indicators and see what works the best for you.
Best Stock Screener
I’ve used a couple of stock screeners and found stock-screener.org to work the best for me. The stock screener is free and you can search for various technical indicators. I use the “gap up screener” to search for break out stocks. I usually combine it with the “unusual Volume screener” to find stocks that are in a strong trend with abnormal volume.
I also use the RSI screener to find oversold stocks that are often trading at support level. This allows me to jump on a trend early. Moving average crossovers and MACD crossovers are also on my screening list.
I usually use 3-4 technical indicators on my search for penny stocks. You should not rely on a single indicator because there it is less powerful and less accurate. You also don’t want to use too many indicators because each indicator may generate conflicting signals and you end up not finding any stocks to trade.
I recommend that you test it out and find out for yourself which technical indicators work the best for you and stick with them. Remember, technical indicators are only one part of the equation to trade successfully. The other part is discipline and you need to develop a set of rules that you can follow every time you trade. If you are just starting out, you can start by paper trading so that you don’t lose any money while learning how the stock market works.
Top 10 Penny Stocks
You can also use MarketClub’s top 10 penny stocks list to see what penny stocks are currently trending. The list gives you ideas on what penny stocks to trade and which penny stocks are hot based on the current market conditions. Again, the service is free so you got nothing to lose. Please keep in mind, this is a list of penny stocks to watch, it is not a buy list. You should decide for yourself whether you want to buy any of the penny stock or not.
Penny Stock App
You can also download the penny stock app if you own an android phone. The app gives you access to daily top penny stock gainers as well as the top penny stock losers. You can also search by price and volume. It is pretty handy and free. All you need is an internet connection, and you are set to go.