All right. So in this video, I'm going to give you a beginner's guide to trading penny stocks. You're probably clicking this video because you're thinking about buying a penny stock. Investing in a penny stock.

Maybe you're hoping to get rich trading penny stocks. I can tell you that it's not that simple. Most people who trade penny stocks lose money, and there are some really big traps in the penny stock market that you've got to look out for. I'm going to explain those in this video.

I'm going to explain to you where penny stocks are typically traded, how to find penny stocks to trade, what type of penny stocks are the most risky in my opinion, and which ones are safer. I'm going to talk about penny stocks that I'm trading right now today that you should be keeping an eye on Now some of these are just going to be a great example of the type of price action that produced a profitable trade. I actually took a trade today, made over 25 000 and that was trading a penny stock. I'm going to give you that as a case study today so you can look at it as an example of the right type of stocks to trade.

And I want to encourage you to dig deep. Keep study, Keep learning as much as you can, because there's a lot of opportunity in the stock market and certainly in the penny stock world. My name is Ross Cameron. In case you didn't already know, I made over 10 million dollars.

Trading primarily penny stocks, I trade lower price stocks. I've done very well. My broker statements are on my website, but I have to tell you as always that my results are not typical. I want you to take this as an opportunity to learn from someone who's had a lot of experience and just study, study study.

So I hope you really enjoyed this video and let's go ahead and jump right in. All right everyone, so let's go ahead and jump in before we do. Case in point: Drct this is a stock up 98 today with 103 million shares of volume. My profit on it is over 25 000.

this. Uh, while some people would say it's not a penny stock, other people would say it is a penny stock. Just two weeks ago, it was priced at a low of a dollar and eighteen cents, and now it's rallied four hundred percent off the lows. It's given a tremendous opportunity and the profits that I have from it are just from today.

not from holding it for multiple days, but just from day trading it. It's a stock that had breaking news. I found it on my scanners right here. It was the leading gainer in the market today.

I'll show you more about these scanners a little bit further along in the video, but um, just to show you this is the right type of stock. I think to be focusing on leading gainers in the market. It's a Nasdaq listed stock. It's not an Otc stock.

so you may be thinking, well, geez, I really want to be trading 50 cent stocks. You know those are cheaper. This is five dollars. It's too expensive and I would agree that it is more expensive, but I have found so much more consistency in this price range of just over a dollar.

And I'll give you just a couple examples. Here's Ll from last week in one day, went from two bucks to seven dollars a share. Here's Nrsn last week in one day went from uh, two dollars to eight dollars a share. So your goal as a trader and and certainly as an investor.

But as a trader, you're looking for stocks that have the potential to make big moves. And even if you only capture a small piece of that move, you know you're never going to. Regardless of how big the move is. you're never going to capture the whole thing.

You'll capture a small piece of it. So it's better to capture a small piece of a big move than a small piece of a small move. And you look at a stock like Apple? How much is Apple up today? Well, let's just see, we'll type it in here. So Apple is up is down Three per.

you know, a third of a percent. Facebook up. Uh, you know, two point two percent. I mean, this is just not significant.

It's hard to make money when stocks are not volatile and these don't have enough intraday volatility. So you might naturally be inclined to go towards penny stocks, which maybe you think are stocks under a dollar. And I think that I understand where you're coming from. But I would encourage you to look at stocks between a dollar and two dollars or three dollars, because that's sometimes when they really start to pick up some strength.

So why is that? Well, let's get into the lesson here: a guide. a beginner's guide to trading penny stocks. So officially, penny stocks are stocks under three dollars according to, um, the Sec. You know by that definition.

I do trade penny stocks a lot. I've got my metrics right up here and these are: this is my profit based on price. All right. So 5 to 10 is where I've made the most Done well.

10 to 20 done well on 2 to 10, not as much under 2. Usually I start to pick up speed over two dollars. and this is, as I mentioned earlier, almost Eleven million dollars in gross profit trading. Uh, momentum and trading.

Uh, oftentimes what could be considered penny stocks so I focus between two and ten. You know, up to 20 is fine. and I focus on trading stocks that meet the listing requirements to be on the New York Stock Exchange or the Nasdaq Exchange. And that's important because those are companies that are submitting quarterly earnings reports.

They are subject to financial transparency And when those types of companies have strong headlines, catalysts, they can work their way up. Uh, from being you know, two, three dollars a share to five, Ten, Fifteen Twenty, and so on, and so forth. One of the big differences between the stocks under a dollar and over a dollar is the way they trade. And you maybe have never been aware of this until this moment right now.

But stocks above a dollar trade with a minimum spread of one penny. Which means, uh, the quote would be a dollar seventeen by a dollar eighteen? Now, a stock could have a larger spread. It could trade. Um, you know, a dollar seventeen by a dollar, Twenty five or something like that.

Um, I can just look on the scanners here just as for instance. So let's see. So naov, this was. Um, I could use this one.

So Naov trading 1.21 by 22. Uh, let's see zme this is another penny stock 33 by 34. Crtd 16 by 17, Rcon 13 by 14.. So you can see these are all trading with a one penny spread inp one penny spread.

Uh, okay, so you know that's very common. Sometimes they'll have bigger spreads. Uh, sometimes they're right at one penny. But in any case, if the stock is below, uh, if it's below one dollar, they can trade down to the one one hundredth of a penny.

That means a 47 47 stock might look like this: four, seven, one four, By point, four, seven, one nine. And so you're trading 47 and the 14th by 47, and the 19th. I mean, it's It's such a, um, sort of 100th of a penny that you could be trading against that very, very, very tiny spread. And so one of the things that's interesting is for a stock to go from 90 cents to one dollar, How many increments does it have to go through? Well, it trades at 1 100th of a penny.

That means 100 increments for every penny. 10 pennies times 100 is a thousand. There's a thousand increments for a stock to go from 90 cents to a dollar. Now, it can skip over increments.

It doesn't always go away to each one, but that's how many increments there are. What about for a stock to go from a dollar to two dollars? there's only a hundred increments. So all of a sudden, it took a thousand to get to a dollar, and only a hundred to get to two dollars. Another hundred to get to three dollars, another hundred to get to four dollars, another hundred to get to five dollars.

And that's why we can see these really quick moves. Once they get over a dollar below a dollar, these stocks can be very slow. I mean, it could. It could trade between 47 cents and 49 cents all day long Because they're you know, two, three, four, one hundredths, just in.

Or there's uh, four pennies. So 400 increments in that small little zone. So these can be very slow moving. So I don't like to trade stocks below a dollar, but as they cross over a dollar, that's when I start to get more interested.

Now, the New York Stock Exchange and Nasdaq require all companies to keep their stock price above one dollar a share. It's a listing requirement. If the stock falls below a dollar a share, the company can get a notice of non-compliance They have a certain amount of time to get their stock back above a dollar. They can also get a de-listing notice, which means you're going to get de-listed from the Nasdaq exchange.

And where do they go? If they get de-listed they go down to the Otc exchange. so you've got the Nasdaq, Nyc Amex exchanges at the top, and they've got the Otc exchange, which is just below that. So Otc exchanges are for stocks that are in bankruptcy or stocks that don't, maybe choose not to, uh, meet the financial requirements to be listed on one of the big exchanges. They're not providing the same level of financial transparency, which means for an investor or a trader, they can be a lot riskier.

Now, in order for a stock to get back above a dollar, we often see reverse splits. Uh, so many penny stocks have gone through a number of reverse splits. You may have seen a typical traditional split like with Tesla recently. So you know Tesla or Apple does a seven to one split.

It's trading at seven hundred dollars. The next day, it's trading at a hundred dollars. The stock didn't go down, they just did a stock split. And so that changes the number of shares.

Outstanding. Because what happens is if you're holding, if you're holding seven, or if you're holding a thousand shares at seven hundred dollars, you own seven hundred thousand dollars of the company. The next day you log in, it's trading a hundred bucks. You're like, oh my God.

And then you realize, wait a second. it says I own 7 000 shares at 100 bucks. Seven times a thousand hundred. So I still have seven hundred thousand dollars.

Okay, few. So what happens is the total number of shares went up times seven and they have to get shareholder approval to do that. But it's fine, and it makes it's It's a good, uh, indicator of management confident in the confidence in the company because they want more people to buy the stock and they'll be more likely to buy if the stock is a little bit less expensive. But the inverse of that is a reverse split.

And many penny stocks have this history of reverse splits. So they do their ipo at like 10 bucks and then six months later the stock's at 50 cents. They get the notice, they have to get it back above a dollar and short of becoming a better company and putting out really good earnings they have. They have no other choice but to do a reverse split.

So a 50 cent stock and they do a 10 to 1 reverse split. The next day you log in and it's trading at five dollars a share. Well so what does the chart look like because it opened it initially 10? Well they have to back everything up. So now they move that open all the way to it.

Looks like it opened at 100 and then came down to five dollars instead of open to 10 and came down to 50 cents. And if you had held 10 000 shares at 50 cents the next day you log in, you're like hey, it's at five dollars. I'm rich and then you realize, wait a second. I'm only holding a thousand shares and I've got the same amount of money in the stock.

Five thousand dollars. That's because they did a reverse split. And so this history of reverse splits pushes stocks lower and lower and lower and lower. Uh, people that are bag holders who've been holding for a long time, their value gets diluted more and more.

and more and more they're they. Just as the stock falls lower and lower and lower, this is basically a way to accommodate a stock that won't stop dropping. It goes it just otherwise it would go negative. So eventually they these stocks can get delisted to the Otc markets.

So a lot of the stocks on the Otc markets are there because they got de-listed but sometimes stocks will just initially list on the Otc market and they never move up to nicer Nasdaq. They don't meet the listing requirements they don't have. they're not able to to get there, and so they don't But I think any company generally speaking would aspire to be on Nicey or Nasdaq. you know, a big exchange.

So the Otc market is sort of the secondary market. and there's three tiers of the Otc market. And this is where most penny stocks live. Because of course, you can't really have a penny stock on Nicey or Nasdaq for very long before the company's out of compliance.

They do a reverse split and then it's back above. You know, a dollar? So the three tiers of the Otc market. it's the best market, The venture market in the open market. The pink market, The pink sheets, pink sheets, Wolf of Wall Street, Bottom of the Barrel.

These are companies that can be in bankruptcy. They don't meet the listing requirements for nicer Nasdaq and not even for the venture market or the best market. Now, they could meet the listing requirements for Nasdaq and Ic with the exception of bankruptcy. so they might have quarterly earnings and do all the right things there.

But they're in bankruptcy so they by default get knocked down to the Otc market. But these are really the bottom of of the barrel. Um, in terms of in terms of stocks. So a traditional penny stock I would usually think of as a stock between one penny and 99 cents, right? They trade in 1 100 of a penny.

But they're They're above one penny. And a typical penny stock will. Uh, the quotes will look kind of like this. This one's 45 cents by 46 cents.

Almost 47 cents. So you can see this has a slightly bigger spread on this particular stock. It is nicey, So not meeting the listing requirement at the moment, but probably trying to plan out how to get back in compliance. And then here's another one listed at 69 cents.

you know up a little bit. Today I just took a couple examples here. These also, uh, both of them have bigger spreads. You know, the spread here is like five percent.

I mean, it's not nothing, it's 69 to 73.. So bigger spreads, lighter volume. and then you have sub penny stocks. And so if you've googled hot penny stocks that I should trade now that I should buy, you may find yourself landing on pages where they're recommending you buy a stock like this.

Trading it a third of a penny. So these are stocks below one penny. They're not even at one penny. a third of a penny.

Although the spread is a third by uh, a ninth. So it's it's um, or 90. It's just under a penny. So it's very close to a penny.

Nine, Nine Tenths of a penny. Whatever. All right. And then you've got Triple Zero stocks.

This is the bottom of the barrel. This is the very, very bottom. These are stocks that trade Point Zero, Zero, Zero Nine One, Two. Point Zero, Zero, Zero Nine.

And this is what the level Two looks like if you bought it. And so the last quote was at Point Zero Zero One, which is a fifty percent decline from Point Zero Zero Two. But imagine if the stock went to Point Zero Zero Four and you were in at point Zero Zero Zero Two, Right. Point Zero, Zero, Zero Four, you'd be up a hundred percent.

Right now, it goes up to point Zero Zero Zero Six. You're up Two hundred percent. Eight, Three Hundred Percent Ten, Four Hundred Percent. All of a sudden, you can see why some people might be inclined to think that this is where I should go to get rich, but it's not.

It really isn't I As a beginner trader, I tried trading Otc stocks. I tried trading these penny stocks and I found them to be completely unpredictable and essentially what you have are periods where they're hyped up and they move up quickly and then they come all the way back down. They go lower than they were before, and while that's not all that different from the price action that you may see on um, Nicey or Nasdaq stocks, you know this one didn't hold its its entire gains. There's still a certain certain degree of that.

These have so much more volume that they're liquid. A lot of these, uh, trip zero sub-zero stocks are illiquid. You really can't get in or out with large amounts of money. But what is interesting? So in 2015 or 16, let's see.

I took a note: 2015 there was 240 billion dollars of dollar volume in the Otc markets 2021. it had gone up from 240 to over 700 billion up almost three times. So the volume dollar volume has definitely increased in the Otc market. But compared to Nice and Nasdaq, you're gonna have so much more liquidity on stocks in the three to ten dollar range.

And this is a stock Drct today with a hundred million shares of volume, 100 million shares of volume. I mean, think about that. This is 500 million dollars in volume. At Five dollars, that's half a billion dollars of volume.

So you can easily move in and out of a stock like this with a million dollar position, a two million ten million dollar position if you wanted to, or easily a five thousand ten thousand dollar position. And that's simply not the case on most of these. Um, you know, really cheap stocks over here. They're just.

they're they're illiquid And so you may see newsletter alerts and you know, hot penny stocks and this and that if you try to google it And that's what I got caught into myself and I just found myself losing money. And you know it drops from point zero zero two to point zero zero one. And you've just lost fifty percent. So there's no way you can manage risk when you're trading those types of stocks.

So I like volatility, but with less risk than the traditional penny stocks under one dollar. And so that's what got me focused on. Oh, and I have a couple examples here, but that's what got me focused on these types of stocks. So this is one here.

Um, you know, like several, the others I've shown you, you know, went from two dollars to 350 in one day. That's that's a fantastic opportunity right now. Let's say you bought a thousand shares of this at two bucks. Or let's say I bought a thousand shares of two dollars.

So I'm putting two thousand dollars into the trade and my max loss is a dollar eighty. The low of this this pullback right here. So I'm really only risking 200 bucks. That'd be ten percent of my account.

Okay, okay, that's not insignificant, but two thousand dollars by the time it goes up to 270, I'd be up 700 bucks. right? So now I risk 200 to make 700. That's a great risk reward ratio. It goes up to three dollars.

I'm up a thousand bucks. I've doubled my account in one day from 2000 to, you know, 3 000. of course that would be if I was willing to put my entire account into one trade. It's a lot of risk.

I have to say, as always, that trading is risky. My results are not typical and you should practice this simulator before you put real money on the line. But you can see where people are going to get interested in trading these types of stocks. Here's another one.

From one dollar to two dollars, it breaks through. A dollar goes up very quickly to 1.65 right? How many increments is it? From a dollar to 1.65 it's only 65 increments, 65 pennies, whereas from 90 cents to a dollar it was a thousand. So now it moves fast. Here's one that went from two dollars to six eight dollars in one day.

Another one of those really big moves. Yeah, so there's some profit that I got on that one. So I found in my all my years of trading that I was able to reduce my risk by avoiding Otc stocks. I still trade what would traditionally be considered penny stocks, but I don't trade the Otc markets, and I don't certainly trade pink sheet stocks.

Generally, they don't have a lot of liquidity they're That means your orders will be very slow to execute. It'll be hard to buy, probably even harder to sell if you focus on stocks like Drct. And this is a stock right now. So let me get my my tools back up here.

So Drct, This is the top gainer right here. 86 percent top gainer in the entire market today. That's that's a big deal that's in the entire market. That means this stock is going to be getting the attention on possibly some news networks.

Uh, possible very likely on trading platforms like Robin Hood, E-trade Td, Ameritrade traders are going to be talking about it. It's the most obvious stock today, and it's going up because it has an actual reason. Not Because some newsletter emailed out that this is a hot penny stock for. you know, this month it's going up because it has news.

You know what's the news here. Fourth quarter earnings right? Full year 2021 Financial results? That's news that's a catalyst That's a real reason to want to be buying a stock. This is what you want to focus on. Some of them are going to be a little less expensive, some of them will be a little more expensive, but these are the type that you want to look at.

So every morning when I log in, this software that I use, which is the same software that a Warrior Pro member has access to, it gives me my top Gappers right here. So this uh is a watch list that stops updating. Uh, the order, the volume increases and stuff. But the order stops updating at 9 30.

So at 9 30 A.m Eastern standard time, this was the top Gappers in the entire Us market of stocks over 50 cents drct Adgi Vynt And then you've got to look at each one and say, well, you know, what's the reason, What's the news, What's the catalyst, What's driving it higher? You do a little bit of research. You look at the chart and it's important to understand. Mark A sentiment. What's the social sentiment on this And you can see that on social media.

You can see that by connecting with other traders. We've got a large community of traders, so I can usually get a good sense. Are traders bullish on this stock? Do they think it's going to go higher? Do they think it's going to roll over? Do they think it's it's not going to work? So I'd sort of take the temperature of what people are thinking on the stock. And when people are bullish and it's the only stock that's going up and it's the most obvious one, I'm going to get aggressive on it.

I'm going to step up to the plate and then as it's moving up in real time in the morning, I could scroll back here. It's going to start hitting my scanner here because it's hitting new highs. So this scanner is just constantly searching the market for stocks moving up in real time. This is basically like having it's like radar.

It's if you want to think of it like that, it's searching the market. And these are all the different stocks that we're hitting today at different times and any of them could have been fine. Opportunities: You you pull it up and you look at it, you make the decision. But this is how I find strong stocks to trade.

I'm not subscribing to, you know, a ton of newsletters, or you know, looking at penny stock alerts or this, and that. I'm looking at my scanners and trying to see what's moving up right now today and what's the reason that it's moving up and that is a big contributor to the success that I've had. It's having the discipline to focus on leading gainers and stocks moving quickly. So just another metric that I'll show you here really quickly.

Uh, let's see. I'm going to do instrument and I want to show you this here. So my performance by instrument relative volume. These are metrics.

These are. these are my trading metrics. This is real money. Broker statements are on the website Warriortrading.com So these are these are real metrics from my own trading.

I can go down here and uh, you know, if you're curious, just grab this. But uh, so the metrics for 2022 You can see 2017 18, 19, 20, 21.. I start in 2017 with 583 dollars in my account. 583 on day one.

That was how much money I had in my account. Right Here I've turned that now into as of my last statement: Balance: 9.9 9.7 in net profit almost 11 million in gross profit, and the bulk of that over 89 percent is on stocks with five times relative volume five times relative volume. What does that even mean? Let's look at a couple charts. So this is the stock right here.

Today this is actually trading on 20 times relative volume the average volume for the last. Uh, you know, all of its days you have one high volume day here, but the average for all of these is one twentieth of what's trading on today. When you start trading stocks with low relative volume or trading stocks that not a lot of people are watching, not a lot of people have interest in them, and it's these are the wrong type of stocks to trade. They're going to be very difficult to trade a stock like this.

For instance, it has no volume today. no one's trading it, No one's looking at it, No one cares about it. But on particular days where it has high volume, those might have been particular days that it would have been worth watching back there. maybe up in there.

So uh, ll, what was the volume on this one the other day? Average volume It's like doesn't even register. And then on this day it traded with almost is that 100 million shares of volume? Just again. Incredible volume Nrsn. And why would a stock usually trade with like 10 000 shares of volume and then the next day trade with 100 or 150 million shares of volume? News.

There's some type of catalyst driving the action and that's your job. if you're an investor, or you're a trader. As a trader, we're looking to jump on stocks that have already started to move the train that's leaving the station. As an investor, you're trying to guess which one's going to be next and that's hard.

It's very hard. I find it easier in my opinion to be a trader than an investor. So I focus on trading. I look for the trains that are leaving the station.

So today on Drct, I didn't even start buying it until it broke over. Uh, this level pre-market Uh, it was like right through here as it broke through that wedge. That's where I started trading it and I got in a little high at 450.. that's fine.

there was still a lot of room, a lot of opportunity, and I knew that because I've seen this pattern time and time again. so I hope this has been helpful. if it has hit the thumbs up. Subscribe the channel.

I often do a live morning show broadcasts. If you're subscribed to channel, you get the notification when I go live, as long as you hit the alert bell and I am adding new content. uh, just about every day so make sure you're tuned in. I hope you really enjoyed this video and I want to remind you as always, the trading is risky, so do take it slow trading a simulator before you put real money on the line.

Uh, Warrior Pro members do have access to a simulator that we offer, so if you're thinking about uh, going pro, come check us out over at Warriortrain.com Or if you want to keep uh, trading on Youtube and just following along, you're welcome to do that. You can use Td Ameritrade for a simulator as well. All right, Thanks again so much and I'll see you for the next episode! Bye everyone! Well I hope you loved that video and if you did, here's two others you should check out. One is the story of how a 92 year old former janitor made over eight million dollars in the stock market check that one out and the other is the simplest day trading strategy for beginners.

That one's going to extend on what we've already talked about here on penny stocks and the right type of stocks to trade, but it's going to go into more detail. So check out those two videos if you want to keep learning And don't forget to subscribe to the channel because I go live every single morning for the live day trading morning show and love to have you guys tuning in.