How to Find High Volume Penny Stocks

by Bryan Keythman

    The U.S. Securities and Exchange Commission defines a penny stock as one that trades for under $5 and is issued by a very small company. A penny stock’s volume represents the number of shares traded in the market in a given day. While a high volume doesn’t necessarily make a particular penny stock a good investment, it increases your chances of being able to sell it when you want to. Low-volume penny stocks are harder to sell and are more susceptible to erratic price movements. You can find high-volume penny stocks using an online stock screener, which locates stocks that match your specified criteria.

    Step 1

    Visit any financial website that provides a stock screener.

    Step 2

    Find the price parameter among the screener’s search criteria. Locate the box next to the parameter and select a low price per share as the maximum price. The screener will return only stocks that trade at this price and lower. You might have to choose from a list of prices or input one on your own. For example, if you want to find high-volume penny stocks that trade for $2 or less, select a maximum price of $2.

    Step 3

    Locate the market capitalization parameter, which describes the total market value of the company‘s stock. Select a low maximum market capitalization in the adjacent box. Penny stocks are generally classified as “microcap” stocks with values under $300 million. In this example, select a maximum market capitalization of $300 million.

    Step 4

    Identify the average daily volume parameter. This setting indicates the average number of shares that traded daily over a recent period, such as three months. Select a relatively high minimum average daily volume, such as 1 million or 2 million. In this example, assume you chose a minimum of 1 million.

    Step 5

    Click “View Results” to see a table of stocks that meet your selected criteria. This table displays one stock per row and lists each stock’s average daily volume, price per share and market capitalization in columns. In this example, the table includes only stocks with a price $2 or less, a market capitalization of $300 million or less and average daily volume of at least 1 million shares.

    Step 6

    Click the heading of the average daily volume column to sort the list so that the highest-volume penny stocks are at the top. Click a stock or its ticker symbol of abbreviated letters to view more information about it.

    Warning

    • Penny stocks are some of the highest risk investments. While there are legitimate penny-stock companies with promising futures, there are also some with unproven businesses and no profit history. Always fully research a company before investing.

    About the Author

    Bryan Keythman has performed stock investment research and writing for a consulting firm since 2008. He also has prior experience sourcing and underwriting commercial real-estate investment and development opportunities for a commercial real-estate developer. Keythman holds a Bachelor of Science in finance.

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