How to Trade Penny Stocks Using Trends and Sectors

Learning how to trade penny stocks for those wishing to use a momentum or swing trading methodology requires diligence and an ever watchful eye on the fickle needs and needs of the market. What may be a blazing hot sector today could be stagnant tomorrow. Investors and traders that execute momentum and swing trades realize that short term gains numbered in days or at the most, a few weeks is desirable.

Penny stocks in the energy sectors and gold sectors are ideal candidates for utilizing this method of trading. Spikes in the cost per barrel of oil caused by a geo-political event can result in oil stocks rising as investors flock to these stocks to ride the wave of profitability as oil prices surge. The same goes for gold stocks. As the price of gold per ounce increases because of a dip in the economy or an event rocks the financial world, investors buy into gold stocks to ride the momentum for profit.

During certain times of the year, some stocks are ideal for trading with trends and sectors. Companies that provide goods and services that provide relief during catastrophic events such as hurricanes are excellent choices during the hurricane season that plagues the southeastern United States during the fall months of the year.

Investors and traders that keep their eyes on current trends realize that there is most likely a company trading on either the OTCBB or Pink Sheet stock exchanges that has a product that has the potential to meet the demand. One area that always evokes strong opinions is the stem cell industry. Whenever legislation is before the houses of Congress relating stem cells, stocks that are associated with stem cell research always surge in anticipation of legislation going forward.