Frequently Asked Questions

---

 Penny stocks refer to shares of small companies that typically trade for less than $5 per share. They are often traded over-the-counter (OTC) or on small exchanges, though some may be listed on major exchanges like NASDAQ. 

 Although penny stocks are cheap, you need sufficient capital to manage risk effectively. The Pattern Day Trader (PDT) rule applies if you make more than three day trades in a rolling five-day period.  

• Momentum Trading: This strategy involves buying stocks that are trending upwards on high volume, hoping to ride the wave of momentum.
• Breakout Trading: Traders buy penny stocks when they break through resistance levels, expecting the price to continue rising.
• Scalping: A very short-term strategy where traders buy and sell quickly, sometimes holding stocks for just seconds or minutes to capture small price movements.
• Reversal Trading: Betting on a stock that is downtrending but shows signs of reversing direction.

• Stock Screeners: Use screeners to filter stocks based on price, volume, or other criteria.
• Social Media & Forums: While risky, some traders get tips from communities like Reddit or Twitter.
• Watchlists: Following a curated watchlist of penny stocks can help you narrow down opportunities.

 Penny stocks have the potential for high returns, but they also carry more risk. While blue-chip stocks are typically more stable, penny stocks offer the chance for significant gains (or losses) over short periods, making them attractive to day traders who prefer high-risk, high-reward situations. 

 The Pattern Day Trader (PDT) rule requires traders to maintain a minimum balance of $25,000 if they execute four or more day trades within five business days. This rule is meant to protect inexperienced traders from taking on too much risk. 

• Brokerage Account: A reliable broker that supports penny stock trading is essential. Some popular platforms include E*TRADE, TD Ameritrade, and Fidelity.
• Charting Software: Tools like TradingView or ThinkOrSwim can help with technical analysis.
• News Feed: Real-time news feeds and stock screeners can help you stay ahead of any market-moving events.