When trading penny stocks, another tough obstacle people often encounter is trading on and interpreting a very low volume for each penny stock being traded. It is rather annoying as the market can be very confusing when in this situation. So what is the very best strategy for reading volume on penny stocks in the market and yield profits as a result? Here are the best methods to use.

First place to make it to is filling your orders when you send them out. Low volume stocks make it quite a bit more time consuming to get one. When the momentum on a stock is high for buying, you should anticipate a difficult fill time if if you go long on a stock and the same holds true going short on a bearish stock. It may be delayed as much as 20 minutes to an hour, making timing tricky.

The next thing that is very important to low volume trading is a volume spike. Each is an upward spike in shares traded that become a part of the price action and movement by preview the next move of the stock. Upward momentum spiking in the price of a stock because of good news can often be a precursor for more good upward movement on that penny stock later on.

Finally, a low volume stock cannot be read as reliably with charting patterns and causes traders to rely on technical and fundamental indicators. With more commonly traded stocks, traders can rely heavily on the technical side of trading, but when it comes to trading penny stocks you absolutely need a fundamental and technical approach as a result of technical indicators under performing.

Truth be told, penny stock trading isn’t terribly difficult from any other kind of trading. You essentially accomplish the same thing in the long term. The true test of staying power is if you are capable of adjusting to this market. Pay close attention to spikes in volume, place trades in the perfect moment and shift some of your technical trading strategies before you trade micro caps.

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