Penny stocks trade at $5 per share or less. You can trade penny stocks on Robinhood as long as they are listed on a major exchange like the NYSE or Nasdaq. The fact that Robinhood traders can’t access most of the OTC markets, which is where most penny stocks trade, only adds to the volume they pour into listed penny stocks.
There’s nothing special about using Robinhood as your broker. What is different about Robinhood is how its traders behave …
In 2020, Robinhood traders bought and sold options contracts at 88 times the rate of traders who use Charles Schwab, a more traditional broker. They traded 40 times the per-dollar amount of stocks as Schwab traders.
But somewhere in there, these trigger-happy traders figured out how to organize.
They learned that they could work together and beat Wall Street at its own rigged game. Their tools are memes, hot sector mania, and the short squeeze.
While I don’t want my students to act like Robinhood traders, there’s plenty of value in knowing what they’re watching.
Table of Contents
- 1 What Is a Penny Stock?
- 2 Penny Stock Volatility
- 3 Can You Make Money on Penny Stocks?
- 4 Trading on Robinhood
- 5 Robinhood Penny Stocks Market
- 6 What Is a Good Penny Stock To Buy on Robinhood?
- 7 What To Consider When Trading Penny Stocks
- 8 List of the Hottest Penny Stocks on Robinhood in November 2023
- 9 Best Robinhood Penny Stocks for November 2023
- 9.1 Hub Cyber Security Ltd (NASDAQ: HUBC) — The Israeli Security Stock Spiker Testing Resistance
- 9.2 Parazero Technologies Ltd (NASDAQ: PRZO) — The Israeli Security Stock Sector Leader
- 9.3 Frontline plc (NYSE: FRO) — The Oil & Gas Stock Swing Idea
- 9.4 Tempest Therapeutics Inc (NASDAQ: TPST) — The 4,000% Gainer Biotech Stock
- 9.5 Riot Platforms Inc (NASDAQ: RIOT) — The Alpha Scanner Watchlist Bitcoin Sympathy Play
- 9.6 BioXcel Therapeutics Inc (NASDAQ: BTAI) — The Alpha Scanner Watchlist Biotech Stock
- 9.7 LianBio (NASDAQ: LIAN) — The Midnight Madness Watchlist Biotech Stock
- 10 Types of Penny Stocks on Robinhood
- 11 How to Find Penny Stocks on Robinhood
- 12 How to Choose Penny Stocks on Robinhood
- 13 How to Trade Penny Stocks on Robinhood
- 14 Robinhood Penny Stocks to Watch: How to Make Your List of Penny Stocks
- 15 Should You Trade Penny Stocks on Robinhood?
- 16 How to Manage Risk on Robinhood
- 17 Can You Get Rich Trading Penny Stocks?
- 18 Trading Fees on Robinhood
- 19 Quick Tips to Making Money With Penny Stocks
- 19.1 Conduct Thorough Research
- 19.2 Trade Penny Stocks with High Trading Volume
- 19.3 Diversify Your Investments
- 19.4 Use Stop-loss Orders
- 19.5 Avoid Emotional Trading
- 19.6 Understand the Risks Involved
- 19.7 Beware of Pump and Dump Schemes
- 19.8 Set Clear Profit Targets
- 19.9 Stay Updated with Market News
- 19.10 Consider Seeking Professional Advice
- 20 What Is the Minimum Needed to Buy Penny Stocks?
- 21 Robinhood Penny Stocks to Watch: Conclusion
- 22 Frequently Asked Questions About Robinhood Penny Stocks
- 22.1 Can You Buy Stocks Under $1 on Robinhood?
- 22.2 Do Penny Stocks Go to Zero?
- 22.3 What Is the Smallest Stock on Robinhood?
- 22.4 Why Is Robinhood so cheap?
- 22.5 Does Robinhood Really Give You a Free Stock?
- 22.6 Can You Day Trade Penny Stocks on Robinhood?
- 22.7 What’s the Catch With Robinhood?
- 22.8 How Do I Find the Cheapest Stock on Robinhood?
- 22.9 Is It Better To Invest with Cash App or Robinhood?
- 22.10 Why Use Robinhood To Buy Penny Stocks?
- 22.11 What Do Investors Look For in Robinhood Penny Stocks?
- 22.12 How Do Banks Influence Robinhood Penny Stocks?
- 22.13 Are There Any Special Discounts or Deals for Penny Stocks on Robinhood?
- 22.14 How Are ETFs Related to Robinhood Penny Stocks?
- 22.15 What Role Does the IPO Play in Robinhood Penny Stocks?
- 23 One Platform. One System. Every Tool
What Is a Penny Stock?
Penny stocks are low-priced shares of small companies, typically trading for less than $5 per share. They’re known for their high volatility but also for their potential for significant returns. These stocks are generally considered high-risk investments but can offer substantial rewards for those who know how to navigate the market effectively.
Understanding Penny Stocks
Penny stocks are usually not listed on major exchanges and often belong to companies with low market capitalization. They’re considered high-risk because they’re susceptible to market manipulation and lack liquidity. In my years of trading and teaching, I’ve found that understanding the fundamentals of a company is crucial when dealing with penny stocks.
Penny Stock Volatility
These stocks are highly volatile, meaning their prices can skyrocket, but they can also plummet. This volatility is due to low trading volumes and limited information available to the public. I’ve seen traders make a killing in penny stocks by understanding this volatility and making informed decisions.
Can You Make Money on Penny Stocks?
Yes, you can make money on penny stocks, but it’s not as straightforward as it seems. The high volatility means the potential for both significant gains and significant losses. I’ve taught many traders who’ve made substantial profits in penny stocks by following a disciplined trading plan.
Having a trading plan isn’t just a one-size-fits-all deal. Your plan should be flexible enough to adapt to different market conditions and types of stocks. For instance, the stocks to watch this week might not be the same as those you should watch next week. Market trends change, and your trading plan should be agile enough to change with them. If you’re looking for a fresh set of stocks to keep an eye on, here’s a curated list of stocks to watch.
Trading on Robinhood
Robinhood is a popular platform for trading penny stocks because it offers commission-free trades. However, it’s essential to understand that Robinhood has limitations, like the unavailability of certain stocks and limited research tools. In my courses, I often discuss the pros and cons of various trading platforms, including Robinhood.
Robinhood Penny Stocks Market
Robinhood does offer a range of penny stocks, but they’re limited compared to other platforms. The app is user-friendly, making it a popular choice for beginners. However, I always recommend that my students diversify their trading platforms to access a broader range of stocks.
What Is a Good Penny Stock To Buy on Robinhood?
There’s no one-size-fits-all answer to this question. A good penny stock has strong fundamentals, high trading volume, and a positive news flow. I’ve shared specific recommendations in my newsletter, focusing on stocks with high growth potential.
What To Consider When Trading Penny Stocks
When trading penny stocks, several factors need to be considered for making informed decisions.
Price action refers to the movement of a stock’s price and is crucial for predicting future price movements.
Remember: the trend is your friend. Understanding price action can help you identify profitable trends.
Understanding market trends goes beyond just looking at the stocks that are hot on Robinhood. The energy sector, particularly oil, often has penny stocks that show significant volatility. These oil penny stocks can be a goldmine for traders who understand the market trends in the energy sector. But remember, these stocks come with their own set of risks and should be traded carefully. If you’re interested in exploring this further, here’s a guide on oil penny stocks.
Unusual trading volume indicates strong investor interest and can be a sign of an impending price move. In my trading career, I’ve found that high volume often precedes significant price action.
Always look for stocks that have a strong news flow. Real, impactful news can be a significant price driver. I teach my students how to differentiate between impactful news and noise.
Be cautious of scams and pump-and-dump schemes. These are prevalent in the world of penny stocks. I’ve seen traders lose their entire investment by falling for these scams.
List of the Hottest Penny Stocks on Robinhood in November 2023
My top 7 Robinhood penny stocks to watch for November 2023 are:
- NASDAQ: HUBC — Hub Cyber Security Ltd — The Israeli Security Stock Spiker Testing Resistance
- NASDAQ: PRZO — Parazero Technologies Ltd — The Israeli Security Stock Sector Leader
- NYSE: FRO — Frontline plc — The Oil & Gas Stock Swing Idea
- NASDAQ: TPST — Tempest Therapeutics Inc — The 4,000% Gainer Biotech Stock
- NASDAQ: RIOT — Riot Platforms Inc — The Alpha Scanner Watchlist Bitcoin Sympathy Play
- NASDAQ: BTAI — BioXcel Therapeutics Inc — The Alpha Scanner Watchlist Biotech Stock
- NASDAQ: LIAN — LianBio — The Midnight Madness Watchlist Biotech Stock
I try to focus on the momentum that I can see with my eyes. I’m not going to speculate on future moves.
The key is to approach every day the same. Be prepared to capitalize on volatility.
I let the trades come to me.
That’s why I’m not holding any long-term positions in these tickers.
I’m just watching these stocks. And this is one of many watchlists I maintain…
There’s no guarantee that any of my watchlist picks will be tradeable. But if something happens, smart traders should be ready.
Best Robinhood Penny Stocks for November 2023
These are the top 7 Robinhood penny stocks to watch in November 2023…
They have a chance to catch fire…
Watch them — and don’t get burned!
Hub Cyber Security Ltd (NASDAQ: HUBC) — The Israeli Security Stock Spiker Testing Resistance
My first Robinhood stock pick is Hub Cyber Security Ltd (NASDAQ: HUBC).
There’s no end in sight for the war between Israel and Hamas.
We spoke about stocks affected by the war when it first broke out on October 7.
Due to the prolonged nature of the conflict, some of those stocks are still in a position to continue their spike.
War is a gruesome reality that most of us wish to avoid. At the same time, it provides volatility in the market.
And as traders, it’s our job to capitalize on volatility.
HUBC is an Israeli cyber security company that spiked 240% the Monday after the war broke out.
The price dipped substantially after that. But it managed to consolidate and push toward the breakout level on Friday, October 20.
It’s still in a position of consolidation near the highs. And that means there’s a chance it spikes even higher!
By the time you read this, the price action might have changed …
Quick! Tune in for the next market live stream where we outline the key patterns we watch for on a chart like HUBC’s.
Keep an eye on the breakout level at $0.80. If the price pushes above that level, it could keep going.
Parazero Technologies Ltd (NASDAQ: PRZO) — The Israeli Security Stock Sector Leader
My second Robinhood stock pick is Parazero Technologies Ltd (NASDAQ: PRZO).
This started as an Israeli drone company that secured regulatory approval in Australia.
The news broke on Friday, October 6 and prices spiked 120%.
Over the weekend, the war in the Middle East broke out. As a result, on Monday, October 9, the price pushed 140% higher.
- PRZO is an Israeli drone company.
- We’ve seen drone warfare escalate in recent years.
- Most notably between Russia and Ukraine.
Fear and greed move stocks. There’s a lot of fear during global conflicts.
Take a look at the market’s defense-sector leader. On Monday, October 9, U.S. defense company Lockheed Martin Corporation (NYSE: LMT) spiked 8%.
That’s a MASSIVE move for a stock with a market cap of over $1 billion.
I’m not trading LMT because the price doesn’t move much intraday. 8% is great for a blue-chip stock, but I need a little more meat on the bone.
So far, PRZO has spiked 460%.
But it’s still a penny stock. The price will crash down at some point.
And everybody knows it … that’s why it’s my top watch for a potential short squeeze. Especially now that prices bounced off key support at $1.50.
Beware of short squeezes right now: the market is saturated with short sellers. They see a crap stock spiking and they instantly want to ride the momentum down.
If there are too many shorts … bullish price action will cause some to panic. They buy to exit the position and it leads to a domino effect of short sellers blowing up.
But it can be profitable for long-biased traders … if you know the rules.
Frontline plc (NYSE: FRO) — The Oil & Gas Stock Swing Idea
My third Robinhood stock pick is Frontline plc (NYSE: FRO).
The war also caused a spike in oil prices.
The Middle East is known for producing highly valuable natural gasses. The main country in mind right now is Iran.
Israel and Iran have been at odds for the last 44 years. There’s some speculation that Iran could have “green-lit” the Hamas attack and the recent escalation of conflict between Israel and Hezbollah in Lebanon.
Since Iran is a major producer of oil, over 3 million barrels a day, the tension and uncertainty caused market prices to rise.
We saw similar price action when Russia invaded Ukraine in February of 2022. We even saw huge small-cap runners like Houston American Energy Corporation (AMEX: HUSA). The price spiked 1,000% in less than 3 days.
I haven’t seen any 1,000% oil spikers as a result of the Middle East conflict … yet.
But the obvious shift in momentum makes me interested in possible swing trade opportunities.
Before Sykes showed me how to trade volatile stocks, I had a history of trading on my own. But I was usually bullish on larger-cap stocks with real financials.
To this day, if I see a decent swing trade opportunity, I feel obligated to point it out.
Since the beginning of 2023, FRO has gained over 90%. It’s trading at the highs as I type this.
It’s still a volatile play from a swing trade perspective, which means we want to be smart with our entries. But for those interested in less volatile intraday movements, stocks like FRO are a great option.
Tempest Therapeutics Inc (NASDAQ: TPST) — The 4,000% Gainer Biotech Stock
My fourth Robinhood stock pick is Tempest Therapeutics Inc (NASDAQ: TPST).
If this is your first rodeo with low-priced stocks that spike thousands of percent …
You better pay attention.
Those with some recent market history might remember Tempest Therapeutics Inc. (NASDAQ: TPST).
On Wednesday, October 11 it announced a presentation on the clinical studies for their treatment of hepatocellular carcinoma.
Prices spiked 3,900%. In one day.
Biotechs are red hot this year.
And biotech stocks that have a float below 10 million shares can spike the highest. The low supply of shares helps the price spike higher when demand increases.
TPST has a float of 7.7 million shares.
Plus, the market is oversaturated with short sellers right now. They’re trying to ride crappy stocks into the ground. TPST spiked so high because it’s a low-float biotech that turned into a huge short squeeze.
It didn’t deserve to spike 3,900%. The short sellers have the right thesis. But if there are too many short sellers, the risk of a short squeeze goes through the roof.
And prices are consolidating near support at $4 right now.
Pay attention to key levels. If you’re unfamiliar with support and resistance, watch my video below …
It’s the basics of the framework we use to trade these volatile runners.
Riot Platforms Inc (NASDAQ: RIOT) — The Alpha Scanner Watchlist Bitcoin Sympathy Play
My fifth Robinhood stock pick is Riot Platforms Inc (NASDAQ: RIOT).
Do you remember cryptocurrencies? It’s been a year or two since this sector faceplanted.
Sam Bankman-Fried (SBF) and his firm FTX were the straw that broke the camel’s back.
Or — instead of a piece of straw, think of it as an oak tree.
When the sector crashed overnight between November 8 and 9, 2022, SBF lost 94% of his net worth. From $15.2 billion to $991.5 million.
At this time, SBF is accused of fraud and money laundering. A possible cumulative sentence of more than 100 years.
We haven’t seen much crypto momentum since then.
But recently, BlackRock’s possible Bitcoin ETF appeared on a list held by a Nasdaq clearing house: Depository Trust and Clearing Corp.
This news is highly speculative and it doesn’t mean the ETF will come to fruition … but crypto traders are highly speculative to begin with. It doesn’t take much to get them going.
As a result, Bitcoin spiked 30% since mid-October.
And remarkably, we saw real trade opportunities in the stock market as well.
Bitcoin put in the biggest green day on October 22. The very next day, on October 23, RIOT started a 20% spike.
Notice the relationship between crypto stocks and the crypto sector.
If the momentum continues, we could see more trade opportunities.
RIOT was alerted by our Alpha scanner. It was one of the first crypto stocks to show us renewed momentum.
I still use the best trading tools because I’m prone to mistakes. I’m only human.
My scanner alerts the stock so that I don’t miss a possible trade.
BioXcel Therapeutics Inc (NASDAQ: BTAI) — The Alpha Scanner Watchlist Biotech Stock
My sixth Robinhood stock pick is BioXcel Therapeutics Inc (NASDAQ: BTAI).
I mentioned the biotech sector earlier while discussing TPST.
It’s on fire.
But it’s important to understand: we can’t buy every biotech stock with news.
Some biotechs put out news and they don’t spike.
The type of news plays a huge role.
We usually see stocks with cancer news spike because cancer is a well-known illness and especially scary. Fear and greed move stocks.
Alzheimer’s is another medical condition that’s well-known and decently common in today’s society. An estimated 6 million Americans live with Alzheimer’s. Any potential cure is of obvious importance to the medical industry overall.
And we’ve recently seen a few Alzheimer’s biotech spikers. That’s a good sign of momentum for this sub-sector.
InMed Pharmaceuticals Inc. (NASDAQ: INM) spiked 250% on October 24 after announcing positive pre-clinical studies for an Alzheimer’s treatment called INM-901.
The price promptly fell after the spike. But its momentum seems to be shifting to BTAI …
BTAI spiked 40% on October 25 after announcing the third-party credibility of their phase three trial for BXCL501, an Alzheimer’s treatment.
The press release also mentions AI. That could contribute to the current consolidation and a possible secondary spike.
LianBio (NASDAQ: LIAN) — The Midnight Madness Watchlist Biotech Stock
My seventh Robinhood stock pick is LianBio (NASDAQ: LIAN).
It’s another biotech!
On October 24, at 6:59 A.M. Eastern, the company announced an agreement with Bristol Myers Squibb.
Bristol Myers obtained rights to commercialize Mavacamten in certain Asian markets. In turn, LianBio received $350 million and doesn’t have to pay $127.5 million to Bristol Myers’ subsidiary MyoKardia.
Hopefully, that made sense. Essentially, LIAN gets a lot of money and doesn’t have to pay looming outstanding debts.
The price spiked 170% after the news was announced.
Keep an eye on key support and resistance levels.
The stock wants to break out so badly … but nobody knows if or when it will happen.
That’s why we use patterns to prepare. Patterns give us indications on when to buy and when to sell. Even if the stock falls apart, we can protect our account if we have enough discipline to follow the rules.
LIAN is one of the stocks that appeared on our Midnight Madness watchlist. It was just one trade opportunity. There are new trades to make every single day.
Start paying attention and it will all begin to click.
Types of Penny Stocks on Robinhood
Robinhood is a retail-focused brokerage. That means it only allows clients to trade on major exchanges such as the NYSE and the Nasdaq.
There are a ton of stocks below $5 on these exchanges. The problem is, you’re only getting part of the pie.
The OTC markets and pink sheets also offer a huge range of volatile penny stocks … But you’ll need a different brokerage account to trade them. Robinhood won’t cut it.
For those interested in exploring penny stocks on other platforms, I have a whole series of articles on the topic! Learn more about using E-Trade for day trading to expand your trading horizons and discover how different platforms offer unique features.
How to Find Penny Stocks on Robinhood
Don’t follow my stock picks blindly. You’ve gotta become self-sufficient. Sure, you can find penny stocks on Robinhood’s mobile app…
But I recommend creating your watchlists from your laptop — it’s a lot easier. Use a screener to search for stocks below $5. You’ll probably want to find some with volume too.
But it’s impossible for one person to watch every penny stock on Robinhood. So either grab a couple of friends to help you stare at hundreds of stocks … or choose a few that show good potential.
Reddit is a popular choice for researching trading trends and connecting with other traders. If you’re looking to broaden your knowledge and explore other resources, consider reading about penny stocks on Reddit to see how social media influences trading trends.
How to Choose Penny Stocks on Robinhood
Choosing penny stocks to trade requires a number of well-planned steps. Doesn’t matter which broker you use.
It’s all about finding hyped-up stocks. Then you ride the momentum and jump off before the move crashes. That can make it sound easy. It’s not. It takes years of education and planning to learn how to ride the momentum in this niche.
But here’s a quick overview…
First, look at stocks with hype. Maybe there’s a news catalyst that day. It could be trending on social media, or maybe it’s just a current hot stock.
Next, make sure that the stock’s daily trading volume is high enough to allow you to get in and out easily. Remember to manage risk.
It’s also important to check the price action on the stock chart. Reading the chart can help you pick a perfect entry position. It can also show good places to set your stop loss and help you understand what the stock’s next move might be.
Chart reading doesn’t have to be complicated. In fact, many seasoned traders look for clean and simple chart patterns.
Keeping up with news, watching the charts, and analyzing trading volume can all be done on a number of different apps … But if you want to get serious about your trading, there’s a much more effective way to do all of these things…
How to Trade Penny Stocks on Robinhood
If you’re gonna trade penny stocks on Robinhood — or anywhere else — you better know the restrictions.
Every platform has its own set of advantages and disadvantages. If you’re curious about how other platforms handle penny stocks, TD Ameritrade is another popular choice for day trading — especially after its merger with mega-broker Charles Schwab. Enhance your trading strategy by learning about TD Ameritrade for day trading, and find the approach that best suits your needs.
Pattern Day Trading Rule
You have to keep the pattern day trading (PDT) rule in mind. This rule isn’t specific to Robinhood. If you have a small account, it can affect your trading.
The rule limits traders to no more than three day trades within a rolling five-day trading period. That is unless you have $25K or more in your trading account.
It can seem inconvenient — especially for new and excited traders — but it’s actually meant to protect you. Most traders lose money. The PDT rule tries to stop newbies from overtrading.
Try to see it as a good thing. It’ll force you to only focus on the best trades. That’s the best study tool there is.
Robinhood Day Trading Limit
The PDT rule can be a big problem for some traders. But again, I encourage you to see it as a good thing. No, you don’t have to listen to me…
Just like when I said that I didn’t think Robinhood had the best day trading software around. You can use it if it works for you. But understand that different brokers can work better for different people.
Don’t limit your options by choosing one just because it’s easy.
This is important, so pay attention. Do your research. Only you can decide which broker and trading platform are right for you.
Decide whether you’ll trade with a cash account or use margin. Margin is automatic on some Robinhood accounts. That can be risky. Read more about margin here.
You also need to figure out if you want access to extended-hours trading. That can also come with risk. I don’t recommend that for new traders.
What’s key is access to charts, watchlists, stock research, Level 2 data, and indicators. You can get all that and more with StocksToTrade. Plus you can trade right from the platform with our broker integration — and you can add on what’s arguably the trading chat room.
When you start trading you have a lot of decisions to make. So take your time. Make a detailed list of what matters to you, then find the right broker and trading platform.
Robinhood Penny Stocks to Watch: How to Make Your List of Penny Stocks
When you build the habit of searching for the best stocks and trading setups, you’ll quickly develop a list of stock tickers that’s long. It happens to every trader…
That’s where watchlists come in handy. It’s your personal collection of stock tickers that you think show potential. Most traders keep multiple watchlists, such as one for a certain sector and others for specific chart setups. How you organize it is all up to you.
Need help with your watchlists?
Should You Trade Penny Stocks on Robinhood?
Robinhood can be more popular with newer traders. But as traders progress past newbie status, they tend to switch to a more robust platform.
Whether you should use Robinhood to trade penny stocks is up to you. But before you make a decision, you should know the advantages and disadvantages that come along with it.
Let’s take a look at a few.
- Free Trades: There are no commission fees with Robinhood trades — that’s one of its biggest draws. But realize they gotta make money somehow. And that could potentially affect the quality of your trade executions
- No Account Minimum: Traders can start right away because there’s no account minimum.
- Ease of Use: More people are on their smartphones a lot these days. Robinhood’s app can make signing up for and funding an account quick.
- Streamlined Interface: One of Robinhood’s drawbacks is that it lacks the tools and resources other brokers have. But its focus on simplicity can be useful for less-knowledgeable traders. Just know that as your skill set expands, you’ll likely outgrow this platform.
- Fractional Shares: Robinhood has fractional shares. That means traders can pay as little as $1 for a portion of a share, even if that share’s full price is hundreds of dollars.
- No OTC Trades: One of the biggest disadvantages of using Robinhood is that it doesn’t allow OTC trades. If trading penny stocks is your strategy, that takes a huge amount of low-priced stock opportunities off your table.
- Poor Phone Support: If you’re trading with real money, you want to know your broker will be there for you if you need help. Communication may be getting better at Robinhood, but seems to be slow going.
- App Dependability: Look online and you’ll see complaints about Robinhood’s app reportedly failing at crucial times. This is a serious concern for traders using real money.
- Limited Functionality: Robinhood lacks the tools and resources more experienced traders expect.
- Potentially Delayed Data: Stock quote data may be delayed as much as 20 minutes. Yep, that’s a problem if you’re trading low-priced stocks. They move fast.
How to Manage Risk on Robinhood
In Hollywood movies, stock traders are often portrayed as high-octane risk-takers. But in reality, the habits of most successful traders aren’t quite as exciting.
The first thing smart traders think about before entering a trade is how to manage risk.
It means you don’t lose more money than your trading plan allows. It’s important to be able to exit positions easily with little stress. When you have a bad day in the market, at least you’ve done your best to protect your account and live to fight another day.
One way to manage risk is to set stop-loss levels. You can place an order with your broker to close a position if you lose too much money. For those disciplined enough, top traders set mental stops and manually close positions that hit loss limits.
Traders can place stop-loss orders from the Robinhood app. They should work as long as there’s enough trading volume in your stock.
Can You Get Rich Trading Penny Stocks?
I hate this question.
Look, you can get rich doing just about anything. Go to med school and become a brain surgeon. Sell the finest underwater woven baskets the world has ever seen. Brew kombucha in your garage. Pump penny stocks.
OK … some of those might be a stretch. My point is anything is possible.
But day trading is hard. Day trading penny stocks on Robinhood can be even harder.
It’s not impossible to get rich in this niche. But be realistic with your expectations. Nothing good ever came from lying around on your butt thumbing through stock pick articles.
If you’re serious about trading penny stocks, start taking your education — and trading strategies — seriously.
I have a ton of resources available to help you on your quest:
- Sign up for my weekly watchlist here.
- Get Oracle’s NO-COST trade alerts.
- Join Daily Income Trader for daily workshops and pro-level resources!
Trading Fees on Robinhood
Robinhood offers commission-free trades, but it’s essential to understand that “free” doesn’t mean there are no costs involved. The platform makes money from order flow, which can impact the execution price of your trades. Always consider the full range of fees and how they can affect your profitability.
Quick Tips to Making Money With Penny Stocks
If you’re looking to make money with penny stocks, here are some quick tips based on my years of trading and teaching.
Conduct Thorough Research
Don’t skimp on research. The more you know about a company, the better your trading decisions will be.
Trade Penny Stocks with High Trading Volume
High volume often means there’s more liquidity, making it easier to enter or exit positions.
Diversify Your Investments
Diversification isn’t just about different sectors; it’s also about different types of stocks within those sectors. Take biotech stocks, for example. They can offer a different risk-to-reward profile compared to traditional tech stocks. Biotech companies often have groundbreaking research and patents that can either skyrocket or plummet based on clinical trials or FDA approvals. This unique dynamic can offer traders like us more opportunities to spot high risk-to-reward setups.
If you’re interested in diversifying your portfolio with biotech stocks, you should check out this list of top biotech stocks.
Use Stop-loss Orders
Stop-loss orders can protect you from significant losses. I’ve seen traders save their accounts by using stop-losses effectively.
Avoid Emotional Trading
Emotions have no place in trading. Stick to your trading plan and don’t let emotions cloud your judgment.
Understand the Risks Involved
Understanding the risks is crucial. Penny stocks are not for everyone, and they come with high volatility and less regulatory oversight. Always do your due diligence and understand the risks involved.
Beware of Pump and Dump Schemes
Pump and dump schemes are prevalent in the world of penny stocks. Be cautious and always do your research before jumping into a trade. I’ve seen traders lose significant amounts of money by falling for these schemes.
Set Clear Profit Targets
Setting clear profit targets can help you lock in gains and avoid significant losses. I’ve always said, “Remember — we’re here for the long haul. We’re here to identify high risk to reward setups.”
Stay Updated with Market News
Keeping up-to-date with market news can provide you with the information you need to make informed trading decisions. In my courses, I teach traders how to interpret and act on market news effectively.
Consider Seeking Professional Advice
If you’re new to penny stocks, consider seeking advice from a professional. While I provide educational content to help traders make informed decisions, a personalized consultation can offer targeted advice.
What Is the Minimum Needed to Buy Penny Stocks?
The minimum amount needed to buy penny stocks varies depending on your broker and the specific stock. However, it’s crucial to only invest money you can afford to lose. I’ve seen traders get into trouble by not following this simple rule.
Robinhood Penny Stocks to Watch: Conclusion
As you can see, Robinhood has some pros and cons just like any other broker or platform. It’s up to you to find your strategy, then find a broker and platform that fits your needs.
If you want to try a more advanced platform, check out StocksToTrade. It’s a platform built by traders for traders and it has a TON of tools and resources that will make even the most experienced traders happy.
The Breaking News Chat alert service can be added to its already-powerful offerings — and traders are in LOVE with it. See how two skilled stock market pros can help you find the news with the most potential to move stocks.
Have you used Robinhood to trade penny stocks? I’d love to hear about your experience. Leave a comment below!
Frequently Asked Questions About Robinhood Penny Stocks
Just skimming? Here are the most frequently asked questions…
Can You Buy Stocks Under $1 on Robinhood?
Yes, you can. Robinhood opens the door to stocks under $1, making it accessible for investors looking for a low entry point. From companies in technology to artificial intelligence, the options are vast. But remember, cheap doesn’t always mean value. Research is key.
Do Penny Stocks Go to Zero?
Penny stocks can be volatile. They can spike, and they can plummet. While it’s rare for a stock to go to zero, it’s not unheard of. Analyzing factors like debt, liquidity, and market cap can help you make informed decisions. Investing with purpose and strategy minimizes the risk.
What Is the Smallest Stock on Robinhood?
The smallest stocks are often those with a low market cap and share price. Selection varies, and the answer may change on a daily basis. Tools available on Robinhood’s site and other platforms can help you filter and find these stocks. But remember, small doesn’t mean sure gains.
Why Is Robinhood so cheap?
Robinhood’s mission is to democratize finance for everyone. They offer commission-free trading on stocks, which cuts the costs for the average investor. Deals with banks and financial institutions also allow them to keep deposit and account fees low. It’s not just about being cheap; it’s about making investment accessible.
Does Robinhood Really Give You a Free Stock?
As of now, yes, traders get a free stock when opening a Robinhood account. To me, it seems like another way the broker tries to entice users. But do your research. Check the terms and conditions, as they can change at any time.
Can You Day Trade Penny Stocks on Robinhood?
Day trading on Robinhood is like pulling onto the highway with two flat tires. You can do it, and it’ll work, but it won’t be pretty.
Serious traders tend to use more robust software. Research different brokerages and software to find what might work best for you.
What’s the Catch With Robinhood?
Robinhood has a sleek app, zero commissions, and you can even get a free stock for opening an account. How can that be profitable?
They make money by charging what’s known as ‘payment for order flow.’ Market makers and trading firms pay Robinhood for the ability to take the other side of your trades. They make tiny profits on each transaction, which add up over time. And no, they aren’t the only broker to do that.
How Do I Find the Cheapest Stock on Robinhood?
Finding the cheapest stock on Robinhood requires research. Use the platform’s search and filter features to find stocks that meet your criteria.
Is It Better To Invest with Cash App or Robinhood?
Both platforms have their pros and cons. Your choice should depend on your specific needs and trading goals. In my experience, it’s essential to choose a platform that aligns with your trading style.
Why Use Robinhood To Buy Penny Stocks?
Robinhood is user-friendly and offers commission-free trades, making it a popular choice for new traders. However, it’s crucial to understand the platform’s limitations and ensure it meets your trading needs.
What Do Investors Look For in Robinhood Penny Stocks?
Investors typically look for highs in earnings and equity when choosing Robinhood penny stocks. Depending on the name of the company and its reputation, some might also consider upcoming IPOs as a favorable sign for investing.
How Do Banks Influence Robinhood Penny Stocks?
Banks play a vital role in providing the necessary capital to these small-cap companies. When a bank takes a significant interest in any penny stock, investors often see it as a good sign for investing. Banks may offer products like ETFs to make investing in these stocks more accessible to a broader range of customers.
Are There Any Special Discounts or Deals for Penny Stocks on Robinhood?
Customers on Robinhood can sometimes find special deals or discounts aimed at encouraging savings and investing in certain penny stocks that are on sale. However, it’s crucial to research the earnings and equity before making a decision.
How Are ETFs Related to Robinhood Penny Stocks?
ETFs that specialize in small-cap stocks often include penny stocks available on Robinhood. This offers investors an alternative way to invest in these high-risk, high-reward assets. Banks may also use ETFs to diversify their investment products.
What Role Does the IPO Play in Robinhood Penny Stocks?
An IPO can significantly affect a penny stock’s price, making it a key event for investors to watch. Depending on how successful the IPO is, the stock may experience highs or lows that could be advantageous or detrimental to investing strategies.