Small Cap Stocks and The Potential For Profit

What are the benefits of day trading? For those of you stuck in dead end jobs in the service industry or sitting at a cubicle staring at marketing plans all day, the chance to escape the career rat race and be your own boss is very tempting. The dream of sitting at home, staring at monitors and searching the market with stock scanners for penny stocks to watch, while raking in the profits, can be a strong draw. You just need to make sure that you are educated in the risks and rewards of the day trading industry.

Think of the Wolf of Wall Street. That charming Leo DiCaprio vehicle told the story of Jordan Belfort, a trader in the 1990s that took his natural sales ability and turned it to penny stocks, building a firm that rivaled the titans of the financial world. In the early days of that film, they were actually trading penny stocks on the pink sheets.

These are OTC or over-the-counter stocks. These are examples of stocks that are not on the traditional exchanges, like the New York Stock Exchange or the NASDAQ. These are smaller companies that often tend to not provide the proper financial documentation, sometimes going through bankruptcy court (often with the help of legal help from the likes of and others of a similar caliber) or have very low share prices. This is a risky market. But the thing to think about when you are looking for penny stocks to watch, is that when you are a day trader, you hold these shares for such a short amount of time, you can control the risk.

First off, stay away from the pink sheets. They are the absolute worst of the penny stocks. What you want to do is to play in the area in between the OTC market and the NYSE/NASDAQ markets.

It is actually quite hard to pull off being profitable with penny stocks. You need the proper education in day trading strategies in order to feel comfortable navigating that market. You may feel more comfortable looking for recommended dividend stocks like those listed on and trading those instead of penny stocks. The dreams of quick returns are enough to get you into the market, but what you really want to do is learn how to do it day after day, grinding out small profits and limiting your losses.

Basically, in any given day on the market, there are a few stocks that are going to shoot up. The key is finding them and timing them. Knowing when you get in on these stocks and keeping track of penny stocks to watch is very important. That is going to be the difference between being a good trader and a bad trader.

Screen time is very important to the process of becoming a profitable trader. What you need to do is spend enough time in front of monitors, watching stock scanners, learning the patterns in real time, in order to create the potential for profit. Practice is very important. Which is why you need to become a paper trader before going out onto the real market. Spending time in a trading simulator and learning the moves with virtual currency is better than trial and error with real money in your savings.

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