Penny stocks on Robinhood, which trade for $5 or less per share, present chances for investors to start small accounts. These are less expensive and frequently dubious stocks, necessitating different approaches than larger stocks. Because Robinhood has no costs and no minimum deposit requirements, it’s a great place for novices to start trading penny stocks. Experienced traders might think about transferring to brokers that support more complex trading requirements.
Penny stocks, often defined as shares priced below $5, have captivated investors for decades with their potential for explosive returns However, navigating the penny stock landscape can be challenging, especially for beginners. This guide delves into the world of penny stocks on Robinhood, providing crucial information for those considering venturing into this dynamic market segment.
Understanding Penny Stocks and Robinhood
What are Penny Stocks?
Penny stocks are shares of publicly traded companies that trade for less than $5 per share These stocks are typically issued by small, emerging companies with limited financial resources and operating histories. While penny stocks offer the potential for significant gains, they also carry a higher degree of risk compared to their larger, more established counterparts.
What is Robinhood?
Robinhood is a commission-free online brokerage platform that allows users to trade stocks, options, ETFs, and cryptocurrencies. Robinhood’s user-friendly interface and lack of trading fees have made it a popular choice for both novice and experienced investors.
Can You Buy Penny Stocks on Robinhood?
Yes, Robinhood allows you to buy and sell penny stocks. In fact, Robinhood is one of the most popular platforms for trading penny stocks due to its zero-commission policy and user-friendly interface. However, it’s important to note that not all penny stocks are available on Robinhood. The platform only lists penny stocks that meet certain criteria, such as being traded on a major exchange and having a minimum market capitalization.
How to Find Penny Stocks on Robinhood
Robinhood offers several ways to find penny stocks:
- Trending Lists: Robinhood curates lists of trending stocks under its “Trending Lists” section. You can filter these lists by sector and sort by price to find penny stocks.
- Stock Screener: Robinhood’s stock screener allows you to filter stocks based on various criteria, including price. You can set a maximum price of $5 to find penny stocks.
- Search Bar: You can use Robinhood’s search bar to search for specific penny stocks by name or ticker symbol.
Top 8 Penny Stocks to Watch on Robinhood in April 2024
Here are eight penny stocks that Timothy Sykes, a renowned penny stock trader, recommends watching on Robinhood in April 2024:
- Trugolf Holdings Inc (NASDAQ: TRUG): A golf simulation company that has seen its stock price surge after announcing an expanded business agreement with AI company mlSpatial.
- Airship AI Holdings Inc (NASDAQ: AISP): A government contractor in the AI space that has seen its stock price skyrocket after announcing a new contract with the U.S. Department of Justice.
- NKGen Biotech Inc (NASDAQ: NKGN): A biotechnology company developing treatments for Alzheimer’s disease that has seen its stock price spike in anticipation of an upcoming presentation.
- AXT Inc (NASDAQ: AXTI): A semiconductor company that has seen its stock price surge after reporting strong quarterly earnings.
- Canoo Inc (NASDAQ: GOEV): An electric vehicle company that has seen its stock price rise after announcing its Oklahoma City location was granted Foreign Trade Zone designation by the U.S. Department of Commerce.
- Nano-X Imaging Ltd (NASDAQ: NNOX): A medical imaging company that has seen its stock price rise after NVIDIA Corporation (NASDAQ: NVDA) bought a stake in the company.
- CXApp Inc (NASDAQ: CXAI): An AI company that has seen its stock price rise in anticipation of its upcoming earnings announcement.
- XTL Biopharmaceuticals Ltd (NASDAQ: XTLB): A biotechnology company that has seen its stock price rise after announcing plans to acquire an AI company and hold a shareholder conference.
What to Consider When Trading Penny Stocks
Trading penny stocks carries significant risks, so it’s crucial to consider the following factors before investing:
- Price Action: Analyze the stock’s price history to identify potential trading opportunities.
- Unusual Volume: Look for stocks experiencing unusually high trading volume, which can indicate increased interest and potential price movements.
- Real News: Stay informed about news and events that could impact the stock’s price.
- Scam Possibilities: Be wary of scams and pump-and-dump schemes that are common in the penny stock market.
How to Buy Penny Stocks on Robinhood
Buying penny stocks on Robinhood is a straightforward process:
- Log in to your Robinhood account.
- Fund your account using a debit card or bank transfer.
- Choose the penny stock you want to buy.
- Select your order type (market, limit, stop loss, etc.).
- Enter the number of shares you want to buy.
- Review and confirm your order.
Frequently Asked Questions
Q: What are the risks of trading penny stocks?
A: Penny stocks are highly volatile and illiquid, meaning their prices can fluctuate dramatically, and it can be difficult to sell your shares when you want to. Additionally, many penny stocks are issued by companies with weak financials and limited operating histories, increasing the risk of losing your investment.
Q: What are some tips for trading penny stocks?
A: Do your research, understand the risks involved, start small, and use stop-loss orders to limit your potential losses.
Q: What are some alternative platforms for trading penny stocks?
A: Other platforms that allow penny stock trading include Fidelity, Charles Schwab, and TD Ameritrade.
Q: Is it possible to make money trading penny stocks?
A: Yes, it is possible to make money trading penny stocks, but it requires significant skill, knowledge, and risk tolerance.
Q: What are some resources for learning more about penny stocks?
A: Several resources can help you learn more about penny stocks, including books, websites, and online forums.
Q: What are some strategies for trading penny stocks?
A: Some common penny stock trading strategies include day trading, swing trading, and long-term investing.
Q: What are some common mistakes made by penny stock traders?
A: Some common mistakes made by penny stock traders include chasing hot stocks, overtrading, and not using stop-loss orders.
Q: What are some tips for managing risk when trading penny stocks?
A: Some tips for managing risk when trading penny stocks include diversifying your portfolio, using stop-loss orders, and starting small.
Q: What are some legal considerations for trading penny stocks?
A: It’s important to be aware of the legal considerations involved in trading penny stocks, such as the Securities Act of 1933 and the Securities Exchange Act of 1934.
Q: What are some ethical considerations for trading penny stocks?
A: It’s important to be ethical when trading penny stocks, avoiding pump-and-dump schemes and other manipulative practices.
Q: What are some psychological considerations for trading penny stocks?
A: It’s important to be aware of the psychological challenges involved in trading penny stocks, such as greed, fear, and overconfidence.
Q: What are some technological considerations for trading penny stocks?
A: It’s important to have access to reliable trading platforms and tools when trading penny stocks.
Q: What are some social considerations for trading penny stocks?
A: It’s important to be aware of the social implications of trading penny stocks, such as the potential for fraud and market manipulation.
Q: What are some economic considerations for trading penny stocks?
A: It’s important to be aware of the economic factors that can impact penny stock prices, such as interest rates, inflation, and economic growth.
Q: What are some environmental considerations for trading penny stocks?
A: It’s important to be aware of the environmental impact of the companies you invest in, including those in the penny stock market.
Q: What are some regulatory considerations for trading penny stocks?
A: It’s important to be aware of the regulatory environment surrounding penny stocks, including the rules and regulations set by the Securities and Exchange Commission (SEC).
Q: What are some ethical considerations for trading penny stocks?
A: It’s important to be ethical when trading penny stocks, avoiding pump-and-dump schemes and other manipulative practices.
Q: What are some psychological considerations for trading penny stocks?
A: It’s important to be aware of the psychological challenges involved in trading penny stocks, such as greed, fear, and overconfidence.
Q: What are some technological considerations for trading penny stocks?
A: It’s important to have access to reliable trading platforms and tools when trading penny stocks.
Q: What are some social considerations for trading penny stocks?
A: It’s important to be aware of the social implications of trading penny stocks, such as the potential for fraud and market manipulation.
Q: What are some economic considerations for trading penny stocks?
A: It’s important to be aware of the economic factors that can impact penny stock prices, such as interest rates, inflation, and economic growth.
Q: What are some environmental considerations for trading penny stocks?
A: It’s important to be aware of the environmental impact of the companies you invest in, including those in the penny stock market.
Q: What are some regulatory considerations for trading penny stocks?
A: It’s important to be aware of the regulatory environment
Airship AI Holdings Inc (NASDAQ: AISP) — The Government Contract AI Penny Stock
Airship AI Holdings Inc. is my second choice for a penny stock from Robinhood (NASDAQ: AISP).
On March 5 at 8:31 A. M. Eastern, the business declared, a new government agreement with the U.S. S. Department of Justice. Government news is HUGE for a penny stock.
After rising sharply and reaching resistance at $9, AISP stabilized above $5 before breaking higher to reach $14. The whole move measures 760%. Prices have since dropped and are currently consolidating over $8.
The chart is below, every candle represents one trading day:
Trading tip: Resistance can become support and vice versa.
I’m watching the consolidation around $8. It’s possible that in 2024 the price will rise and reach all-time highs. This year, the stock market has seen an enormous bull run. And that momentum trickles down into our small-cap sector.
Because big runners benefit from a favorable market environment, that is one of the reasons AISP spiked as it did. I traded this spike 5 times, all for a profit:
- March 5: Starting stake of $7,725. Profit of $682.
- March 5: Starting stake of $15,150. Profit of $576.
- March 6: Starting stake of $12,512. Profit of $542.
- March 8: Starting stake of $17,577. Profit of $117.
- March 18: Starting stake of $19,320. Profit of $540.
In total that’s $2,457 on one stock. I’m looking for my next opportunity!.
Set an alert in StocksToTrade. You will receive a notification if the price approaches the breakout level.
What Are the Risks Associated with Trading Penny Stocks on Robinhood?
Still with me? Good. Let’s dig into the risks. Penny stock trading on Robinhood or with other brokers can be a very unpredictable game. Illiquidity and volatility can be a trader’s nightmare. Due to these stocks’ shallow market capitalization, extreme price fluctuations are typical, and if you’re not careful, losses can mount up quickly. Even with its ease of use and simplicity, Robinhood can’t completely eliminate the risks involved with making speculative investments in markets like marijuana penny stocks. Be mindful of the reality and keep your portfolio balanced. Avoid putting all of your eggs in one penny stock basket by diversifying your holdings with other goods and services.