5 Steps to Start Your Penny Stock Trading Journey


Penny stocks have a bad reputation and there are valid reasons why this is the case. The crowd is full of scams, pump and dump schemes, and penny stock promoters that play on everyone’s emotions and desires to get rich quick.

But the reality is these illegal and immoral activities represent a very small portion of the penny stock universe. The vast majority of companies whose stock trades for less than $5 run legitimate businesses. Many of the educators offering penny stock trading strategies are for the most part legitimate and deliver value to anyone interested in learning how to trade.

Penny stocks are safe to trade and invest in, but as is always the case, a certain degree of caution is required. If something sounds too good to be true, chances are it is.

Here are five ways beginners can start learning about penny stocks.

Get Lost Online Doing Research

The most logical place to begin your penny stock trading journey is to get lost on the internet. A simple search on YouTube for “penny stocks 101” or “penny stock strategies for beginners” will generate hundreds, if not thousands of hours worth of content.

The best course of action is to watch the first one to two minutes of a video to get a feel for the content. Add each content creator that you think offers anything of value and subscribe to their page so you never miss a video.

After getting lost in YouTube, explore one or many of the online forums for penny stock traders. One of the more popular starting points for those looking to collect knowledge and advice from like-minded people is Reddit pennystocks.

Take An Online Course

Getting lost in the internet is a great starting point but it takes a lot of time to filter out all the poor information. Instead, consider paying for an online course as a way to erase all the noise.

Online courses for the most part aren’t terribly expensive while many offer exceptional bang for the buck. Timothy Sykes is synonymous with penny stock trading and has a great story to tell. Born to a middle-class family in Connecticut, Sykes turned his bar mitzvah gift money of $12,415 into more than $2,000,000 by the time he graduated university.

Sykes documents his trades on his Profit.ly website so we can see he legitimately knows how to make a lot of money trading penny stocks.

Sykes and a select few of his hand-picked stock experts offer a variety of courses that cover many topics. Some of the more popular courses and their costs include:

  • “Trader Checklist Part Deux” ($297): Learn how to build watchlists, identify catalysts, plan short selling trades, and much more.
  • “Trading Around Equilibrium” ($297): A 20-hour guide explaining why futures and non-penny stocks shouldn’t be ignored.
  • “ShortStocking” ($397): Six hours of learning material on how and when to short a stock.
  • “Quant Trading 101” ($497): Learn how quantitative analysis can be used to form qualitative opinions.
  • “Trading Tickers” ($1,797): The priciest option available includes specific trading strategies and 35 live trade examples.

Sykes certainly has a lot to teach but he also emphasizes the importance of having the right mindset. Simply memorizing and copying someone else’s trading technique is never recommended. Instead, traders need to first understand the basics that Sykes teaches and then adapt to create their own trading strategy that works best for them. Read this review for more information.

Follow The News

After spending time learning the basics of penny stocks, the next logical step is to start following penny stocks. There are a handful of online stock market news sources that cover penny stock movements. Some are free while others might charge a monthly or yearly membership.

Some of the more notable news sources include:

1.TheStreet: CNBC personality Jim Cramer is the co-founder of TheStreet.com. The financial news website has a page dedicated exclusively to penny stocks.

2.Benzinga: If a penny stock is moving hard and fast, Benzinga.com will likely have an article explaining why.

3.Seeking Alpha: While Seeking Alpha focuses on opinion, there are many knowledge penny stock pros offering free commentary on the hottest penny stocks.

4.Twitter: Just add a dollar sign before the stock’s ticker in the Twitter search bar to find the latest discussions about hot penny stocks.

Practice, Practice and Practice

Many online stock brokers offer the ability to open a paper or mock account. Also known sometimes as a simulated account, a paper account allows anyone to practice buying and selling stocks with fake money.

This is an ideal way to not only practice a strategy but to get used to an online trading platform and its many features.

A paper account is the closest thing possible to a live, real money account. Traders should take advantage of the free demo account to practice their strategy before risking their savings. If someone can’t make money in a demo account it is likely a sign they are not yet ready to go live.


After weeks or months of studying, reading, and practicing penny stock trading strategies, it may be prudent to start again from the beginning. If you found value in Sykes’ educational program, keep doing what you’re doing. If you found a YouTube channel that you think is compelling, spend more time watching their videos both new and old.

After that, it is a good idea to leverage your new knowledge to refine and improve your trading strategy with a paper account.