How to Buy Penny Stocks Overnight? Beginner Day Trading Strategy
When is it good to buy and hold penny stocks overnight? This is one of my best day trading strategies for beginners. I have SIX criteria for this overnight swing trade set up. And I’ll be going over each one step by step in this video. If you stay till the end, I will tell you the next hot penny stock I am buying as an overnight trade.
0:50 – Overnight play example $KEG.
2:20 – Be selective with set ups for 62% rate and 7 to 1 profit loss ratio.
2:50 – Criteria 1, 2, and 3
3:18 – HMNY stock (moviepass) as a detailed example.
4:48 – Criteria 4: Clean chart history, not a lot of spike and fail
6:05 – Criteria 5: Closing on 1st day or second day strong green candle
7:22 – Criteria 6: I’m familiar with the stock ticker or have day traded it before
8:19 – Bonus criteria: Penny stock sector sympathy hype or upcoming company news release
9:37 – Potential risk and my huge losses from this beginner day trading strategy
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Overnight play example $KEG. On the daily chart set up, I want to see the stock closing above previous highs and clear buying volume coming into the stock.
Being selective with set ups for 62% rate and 7 to 1 profit loss ratio. You must be selective with the penny stocks you do decide to buy and hold for an overnight trade. If you see my excel sheet tracking this strategy, you’ll see that I sometimes go weeks or even months without taking a single small cap stock overnight if nothing meets my criteria. My own success rate for this trading strategy is 62%, but the profit to loss ratio is 7 to 1. And that’s good risk to reward profile. If you stay till the end of this video, I will tell you the next hot penny stock I am buying as an overnight trade that meets all six of my criteria and present an A+ set up.
Criteria 1: Increasing volume on the daily chart.
Criteria 2: Clear break out or up trend on the stock’s daily chart.
Criteria 3: Bullish green candle closing above previous highs
Besides $KEG, I am also using my HMNY trade as an example. At the time this sketchy penny stock company was releasing press release about their Movie Pass partnership. The stock was squeezing shorts for about two weeks straight. At the time it rain from .70’s all the way to a high of . I took HMNY stock overnight in October 2017. I bought at and sold into the morning spike in price at . On the daily chart you can see HMNY stock has met all three of my criteria before.
Criteria 4: Clean chart history, not a lot of spike and dump. Examples of some ugly daily charts for small cap stocks I would avoid for buying overnight are: $PLAG, $BPTH, $GBR. All of those penny stocks on the daily chart shows a lot of failed spikes. Either the volume is too low or the stock doesn’t have a clear up trend and showing a lot of stock dilution. Those stocks I would only trade intraday and would avoid for any buy overnight.
Criteria 5: Closing on 1st day or second day strong green candle. The reason for that is because usually by third day the stock is really extended to the upside. The probability of the stock continue to hike higher is a lot lower on the fourth day, also a lot riskier.
Criteria 6: I’m familiar with the stock ticker or have day traded it before. I will always prefer names I have traded before, such as HMNY, SAEX, GLBS, TOPS, LFIN, CHFS, CLWT. If the penny stock is something I am brand new to, such as DCAR and HYRE. I will sell half of my positions before the close just to pay myself a little and reduce my overnight risk with these penny stocks.
Bonus criteria: Penny stock sector sympathy hype or upcoming company news release. During the cryptocurrency blockchain hype, there were many promoters pumping crypto penny stocks. Those present good opportunities for buy overnight because of sector sympathy. Plays such as XNET, RIOT, LFIN and OSTK were good candidates. Same goes with the shipping sector stocks like DRYS, DCIX, TOPS, and marijuana stocks like ACB, CRON, TLRY.
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DISCLAIMER: I am not a financial adviser nor a CPA. These videos are for educational and entertainment purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.