Penny Stock Trading Windows - dummies

Penny Stock Trading Windows

By Peter Leeds

Penny stock trading windows can be very helpful to your investment strategy. When information is released publicly that materially affects a penny stock company’s outlook, investors react very quickly. You will see the adjustment to the perceived value (the share price) in the eyes of investors change to new levels almost immediately.

The majority of price moves in stocks occur over the minority of time. Generally, 80 percent of any penny stock’s increases or decreases happen over 20 percent of the trading days. In addition, 80 percent of price changes generally come during a single period of time instead of spreading out at different times throughout the months or years.

While not always the case, you will generally be able look at a penny stock’s annual trading chart and see major rises or falls in share price taking place over a very short time frame. When a penny stock makes a move, it will get to its new price range quickly and then settle into a less volatile, or relatively neutral, trajectory.

While low-priced shares are known to be more volatile, they do have extended periods during they don’t change very much in price. Considering and anticipating trading windows is a great way to build profits up quickly while avoiding tying up your money on boring or sideways-trading investments.

Most of the significant price moves in penny stocks happen as a direct result of events. Material occurrences — whether a new product launch or strong quarterly results — are what drive the prices.

By doing a little research you can find out the approximate release dates of a significant portion of these corporate events, whether it will involve results of a medical trial, financial reports, or the outcome of an industry presentation. If the details come out in the company’s favor, the shares of the underlying penny stock could move strongly and quickly.

By playing trading windows, you don’t have to hold the investment for very long, which limits your risk exposure while opening yourself up to the potential of strong short-term price moves.