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[H363]High Volume Penny Stocks

by Robs, Rob

Rising volume when prices are falling can come in two flavors. There are volume spikes which typically indicate a short term bottom as those hoping for higher prices bail; and then there are the gradual build up in volume type moves accompanied by gradual but continuing declines in price. These are the sickening moves that happen from time to time where you have a blow off type volume move over a period of days that results in very low prices relative to the general price level and is usually accompanied by a V shaped volume and price spike back in the other direction. The problem is having the patience and the nerve to stick your neck out in such a decline. You have to gradually average in to such a move as the odds of catching the bottom tick are almost nil. You will find these types of plays all over the place during a bear market.

In a bear market, there are stocks that still rise. However, in a bear market, there are times when even the good stocks are pulled down and you find declining prices on average or falling volume. Falling or average volume when prices are falling is usually a sign of strength, not weakness; especially if the stock has generally been in an uptrend prior to the short term down trend.

When a stock exhibits steady volume when prices are steady, then this doesn't really give us anything to go on. It doesn't give us any insight into where prices will necessarily go based on a volume read, but the fact that the price range is narrowing suggests that something will occur soon enough. It is then that we will get both a volume and a price read to determine the sustainability of the next move.

There is a close relationship between price and volume. Although indicators have been built on various volume measures, all indicators have a couple of inherent problems and we continue to feel that it is important to view price and volume as a relationship that says different things about a stock when the general trend is up versus down, versus sideways. In general, rising prices should be accompanied by rising volume for the market and/or stock to be healthy.

Similarly, falling prices should be punctuated with volume spikes and to a lesser degree, rising or steady volume shows a healthy continuation to the downside. Falling volume that is associated with rising prices generally is a red flag warning you to be careful as a healthy correction could be just around the bend.

Average volume on rising prices generally occurs when a stock is turning from down to up or sideways to up or sideways to down. Generally a stock that moves from up to down has large prices drops that is accompanied by large spikes in volume.

If you intend to trade stock, you should only ignore volume at your own peril. It can give you the comfort to stay with a position when times are tough, or to signal that you need to lighten up or get out of a position when things seem fine. Volume recognition is your friend just as is the trend.

Article Written by wallman

What is a penny stock ? There is no official definition. Some say any stock under two dollars, some say under five dollars. I call a penny stock any stock that trades under one dollar. A sub-penny stock is any stock that trades under one penny. (.001-.01) A sub-sub penny stock or super sub are those stocks trading in the .0001-.0009 range or hundredth of one penny.

Here are the different markets that penny stocks trade on. The OTC Bulletin (OTC-BB), over the counter (OTC) and pink sheets markets here in the USA. In Canada there is the TSE and TSE Venture Exchanges. Also there is the NASDAQ small Cap Market. All the shares on this exchange are one dollar and up so are not penny stocks by my definition. Also there is the American Stock Exchange (AMEX) .The NASDAQ and AMEX are the safest with reporting requirements that enables investors to have access to the companies financial filings. Pink Sheets are the most risky with no reporting requirements .Sometimes they even gag the transfer agent so you can't even find out the share structure, (bad sign). Yet these risky, pink sheet stocks give you incredible leverage. Most if not all of the super subs are pink sheets. The super subs give you the most bang for your buck. The way I look at it, the leverage you get with penny stocks makes up for them being more risky.I would not call it investing with pink sheets, actually it is speculation. It's all timing with short term penny stock trading. You can make money buying the worst companies at the right time and money can be lost buying even the best companies at the wrong time. Actually I need to say buying and SELLING at the right time will make you money. I've heard it said that 80% of a successful trade is in selling at the right time.

Why trade penny stocks

Penny stocks can make you very wealthy in one to three years if you learn how the game is played. You may have heard investing in penny stocks is risky. It is very risky, specially if you don't know what you are doing. High risk/high reward. Do not trade with money that will destroy you if you loose it. So why do it if it is risky? The number one reason is leverage.It is simple math. Because the price is so low you can buy millions, hundreds of millions, even billions of shares. At the lowest price of .0001 you can buy a million shares for $100.00 and hundred million shares for $10,000.00.If the price goes to one penny you have made one hundred times your money. Your $100.00 is now $10,000.00 and your $10,000.00 is now $1,000.000.00 .Yes now you have one million dollars. Does this happen? Yes it does!

Huge moves like that don't happen every day. When a stock goes up to ten times your money it is called a ten bagger, five times a five bagger. Ten thousand dollars put into a ten bagger is one hundred thousand dollars put that into another ten bagger and you have a million dollars. you would still have a million even starting with a thousand dollars if you had three ten baggers in a row instead of two in the previous example This is not to say you can't loose money. You can! These are just examples to open your mind to the power of super leverage. The beauty of trading penny stocks is you can work from home or from anywhere that has a internet connection. All you need is a computer( I use a laptop), a internet connection, a on-line broker and some money to start. How much do you need to start? It depends on your situation. It is best to start small until you have gained some experience.

The people that I see that make the really big money in penny stocks have a considerable amount of money that they are trading with. The old saying, "it takes money to make money" is true. It is all about liquidity. These stocks are so volatile the only way to play them is trade them. When you start with a small amount of money in your trading account, it is very easy to get wiped out to nothing. It's happened to me more times then I want to admit. After getting wiped out but seeing that penny stocks have the very real potential of making millions I started looking for a way to generate a large amount of money to trade with. I found an online marketing business called Wealthy Marketer that I am using to create the trading capital I need. An online business that pulls in $900 per sale instantly and creates unlimited passive income streams. It is a perfect complement to trading penny stocks as it gives me the liquidity I need and is a automated online system that does 98% of the work for you.

Article Source : Where To Invest Stocks

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Robs has sinced written about articles on various topics from Finances, Forex Trading Forex and Penny Stocks. Wallman member of . Robs's top article generates over 18100 views. to your Favourites.

Jeff Goodman has sinced written about articles on various topics from Make Money Online, Penny Stocks and About Branding. Jeff Goodman Trades penny stocks and has a He is a Coach for. Jeff Goodman's top article generates over 6600 views. to your Favourites.