There is really no limit of the ways you can invest in penny stocks. Buying one of the top 1000 penny stocks or even investing in all of the top 10 penny stocks does not guarantee success for the penny stock trader.
However, understanding what penny stock strategy to apply at what time can help you on the way to success.
You see by using the right strategy at the right time it’s possible to make money even on the worse penny stocks. The key here is to understand that every stock has potential to be a winner and it all depends on using the right strategy at the right time.
Let’s take a look at the two primary strategies penny stock traders use.
1. Day Trading
Day trading is entering and exiting a position within the same trading session. This method works wonders on penny stocks that are moving rapidly either higher or lower on the day. It’s critical to remember that you need to have at least $25,000 in your account so your broker will not shut you down due to the pattern day trader rule.
Day trading makes sense when the stock is about to or is in the midst of a sharp, news driven move. Many times these rocket type stocks quickly fall back the next day. Therefore, buying and selling in the same session is the only way to safely lock in profits. Remember, the same thing can be said for stocks that you may short and cover during the same day.
2. Swing Trading
Swing trading penny stocks is when you hold the shares for anytime over one trading session. Swing trading works best for penny stocks that are slowly climbing higher and it takes more than one day to reach their full potential.
Source: http://tradingtips.com/daily/penny-stocks/two-effective-strategies-penny-stock-traders/