I know when I first heard of day trading penny stocks, I was totally lost. There was so much vocabulary, so many things to remember, I didn’t know where to start. I didn’t know how everything fit together. That’s what this chapter will solve. This chapter is dedicated to giving you the overall process of day trading penny stocks.

Let’s get down some key terms first.

Day trading simply refers to buying and selling shares of a stock on the same day.

Penny stocks are stocks that trade on the OTCBB (Over The Counter Bulletin Board) and Pink Sheets (think of the OTCBB and Pink Sheets as the Nasdaq and New York Stock Exchange of penny stocks). Their typical price/share is around $0.0001-$5.00.

Due diligence (often referred to as dd) – refers to the research that is necessary before deciding to buy a stock. It is extremely important.

Market makers – institutions that regulate the stocks on the OTCBB and Pink Sheets.

Bid – the price at which market makers are willing to buy your shares. In other words, the price you can sell your shares at. It’s the bidding price for your shares.

Ask – the price at which market makers are willing to sell you shares. In other words, the price you can buy shares at. It’s the asking price to buy shares.

Profit Percentage Gain – the maximum percentage level at which you want to take your profits. For example, if your profit percentage gain is 20%, then you will always take profits when the stock rises by 20%. You won’t wait for it to go higher. You’ll sell and take the 20% profit.

Stop Loss Percentage – the maximum percentage level at which you will take a loss. For example, if your stop loss percentage is 15%, and a stock you invested in falls by 15%, you will always sell your shares and take the 15% loss to preserve your capital.

Now that we got some basic vocabulary out of the way, let’s find out what day trading penny stocks is really all about.

Day trading penny stocks is simply buying and selling shares of a penny stock on the same day.

Now, why in the world would you want to do that?

Because that is how you can REAP the MOST PROFIT in the SHORTEST AMOUNT OF TIME.

Here’s an example.

Penny stock ABC is trading at $0.05 cents/share. That means each share is worth 5 cents.

You buy 10,000 shares of ABC. That means you spent $500 (0.05 * 10,000).

Penny stock ABC rises to $0.08 cents/share.

You sell 10,000 shares of ABC at $0.08 cents/share.

That $500 dollars you invested in has turned to $800 (you sold 10,000 shares at the price of 0.08 so $0.08 * 10,000=$800).

$500 -> $800 IN ONE DAY! That’s a 60% gain. You WILL NOT see 60% gains in ONE DAY with stocks trading at the NASDAQ OR NYSE. ONLY PENNY STOCKS display this kind of rapid growth.

Historically speaking, long term investing in the stock market yields an average of 10% A YEAR.

With day trading penny stocks, you can EASILY get 10% A DAY.

We’ve all seen the example of compounding 10% a year and becoming a millionaire in 60 or so years. What would happen if you compounded 10% A DAY? Would it take as long? You don’t need a math degree to figure that one out. The results are jaw dropping!