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Just a few days ago, I was in touch with an urgent buy - and a bonus trade - in the best gold penny stock going right now.
Well, I hope you've got room for an extra couple of helpings of cash, because my F.A.S.T. SCAN system isolated three more penny stocks primed for big moves up.
I'm going to name the tickers and give the setups, but first, we're going to look at two ways to handle these "penny rockets" to get maximum upside out of each one...
Two Rules for Buying and Trading Penny Stocks
The truth is I've got 10 hard and fast "commandments" for penny stocks, but I think it makes the most sense to share these two with everyone right now.
SET ENTRY AND EXIT RULES: Discipline is paramount when it comes to trading penny stocks. These names move a lot faster than your typical New York Stock Exchange ones.
On large-cap stocks like Nvidia, Apple, and Alibaba, there's a lot of news every week. There are things you can see coming miles down the road, be they announcements, earnings reports, or analyst calls.
With more information, there are slower moves. Nvidia isn't going to move 70% in a single day. It has the Law of Big Numbers working against it.
And slower moves mean less emotion from traders.
On the flip side, when you take virtually unknown penny stocks, there's a lot less "G-2" available. You don't get the same kind of intel. You won't see an earnings report or an analyst call blasted on CNBC headlines about one of these over-the-counter (OTC) names.
And with less information, there are faster moves. Penny stocks operate under the Law of Small Numbers, and with that comes more emotion.
Emotions and investing are inseparable, especially when you're trading penny stocks and watching your money rise and fall at a much faster pace. If you want to maximize your profit potential, then you have to train yourself to manage them together. The heat of the moment can lead to mistakes if you don't have a predetermined plan.
That's why it's incredibly important to set entry and exit prices before a trade is opened. And stick to them.
How? Use stop-limit orders to enter trades. Don't buy a stock until it reaches a specified price, and you'll never pay too much. Set tight trailing stops as a way to minimize losses and guarantee gains.
That way you keep emotion out of it - and money in it. Think about it: Your investment is climbing up higher and higher. You told yourself you'd get out at 100%, but you want more - and you abandon your exit strategy right before the stock tanks, putting you right back where you started.
That's exactly what you're trying to avoid.
Five hundred percent, 700%, 1,000% - they're all attainable profits with penny stocks. But you can't go into a trade trying to make 1,000%. That's like putting $500 down on green in a game of roulette - and we aren't risking our money like that.
We're targeting specific, consistent gains. And we're doing it with specific entry and exit rules. And good thing, too, because there's almost always lots of action...
VOLATILITY IS YOUR BEST FRIEND: To make money on low-dollar stocks, you need them to move. That means you need volatility.
And penny stocks are some of the most volatile names out there. But it doesn't help to get in on a stock while it's jumping around.
You want to watch for the "calm before the storm" - and take advantage of it. Rising volume levels tend to indicate volatile waves ahead. And those waves drive prices higher - fast. How do you find the calm before the storm? With something called Bollinger Band Width, which you can see on the bottom of this FORW chart.
I like to call this the volatility band. See those spikes? That's volatility. When the band is moving up, volatility is high. If, however, the band is low, that's when I'm paying attention.
If the volatility band is low, but volume is rising - that's the calm before the storm. Rising volume + Low volatility = The time to get in.
Listen to what stocks are telling you. That's how you take advantage of volatility. To ride the trend to profits, you need to be there ahead of the waves of other investors looking to get in.
With all of this said, I've done the legwork for you and my Money Morning LIVE viewers to develop these three fast-moving picks.
Three Penny Stocks to Move on Immediately
Now, these three stocks don't necessarily have anything in common, other than the fact that they each hit my proprietary criteria recently. Notice the volume activity and Bollinger band width on each of the following three charts...
First up is Florida-based Iqstel Inc. (OTC: IQST), a jack-of-all-trades company working in telecommunications, electric vehicles, fintech, the "Internet of Things," and blockchain technology. It's tiny, with a market cap below $80 million and a share price of less than $0.60 right now.
Oculus VisionTech Inc. (OTC: OVTZ) is a $66 million Canadian firm based in Vancouver. It's a development-stage tech company focused on protection - document protection, to be precise - something that can be underestimated in this day and age. OVTZ shares are the "priciest" of the three we're looking at today, though they trade at just under $0.75.
Last and, well, least in terms of market capitalization, is ILUS International Inc. (OTC: ILUS), an M&A investment firm out of New York City but operating worldwide. It acquires other operations in the tech sector, engineering, and the manufacturing sector. Its market cap is "micro-micro," at just under $3 million, and its shares are trading over the counter at $0.40 each right now.
My recommendation for each of these three is... BUY.
When it comes to IQST, buy up to $0.55 and set a 10% trailing stop when the stock hits $0.75. OVTZ shares - buy 'em up to $0.81, and make your trailing stop 10% when the stock reaches $0.90. With ILUS, buy up to $0.45, and lay in a trailing stop of 10% when shares hit $0.80.
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About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.
