Trading Penny Stocks in Australia?

[Danowazza]

I'm aware of all the pitfalls of trading Penny Stocks but I want to ask if these are safe or worth trading in Australia? There seems to be allot of people trading these in the U.S but in Australia I'm not so sure.
If there's sufficient volume, does anyone trade these in Australia?
What's the minimum capital value I should be looking for when trading Penny Stocks?

Just out of frustration with the miserable daily returns on Australian Stocks I'm not looking at Penny stocks as an option.

 

[divs4ever]

i do not trade them as such ,

but some folks do ( and may even be members here .. there are plenty of chartists and that is a very handy skill for traders )

the first thing you NEED is a reliable internet connection and a solid trading platform because the ASX can have it's bad days ( and you don't want to be waiting too long to hit the sell button , when you need to )

but please take care

 

[stanwell]

Lots people trade penny stocks. You can check here, Hotcopper and Twitter.

For ASX pennies, a good understanding of mining or medical fields would help. Or really experienced at reading the chart to see where the money goes.

As most people would fail with trading penny stocks due to its unpredictable nature, one should just use the fund that he can dispose without losing sleep.

There aren't many strong penny stocks despite one pops up today and another next day. A portfolio of around 10 strongest stocks would be enough to spread the risk and hit a winner or two. One winner will cover all your losers and still make money.

 

[tech/a]

I do.

As for returns on Aussi Stocks (Larger) if your trading with a large capital base
you can get great returns. I call great $1000 a day.

Today is an average day

 

[divs4ever]

yes IF i could do that once a week ( and break even on the rest ) although i remember a very tense debate ( on a different forum ) with a guy who claimed he was day-trading NAB now there was quite a bit of disbelief until a printout of the trades was produced

now IF that screen shot was accurate , yes he was shifting a LOT of NAB often ( to make 50 cent swings in NAB a viable money earner )

but sure if you have the skills and timing $1000 can be a lot of fun when things go right ( 30 percent jumps in a day are not all that rare for some stocks )

 

[charlsie]

could someone define penny stock please? Are they stocks under 10c ?
I've been trading 20+ years and only now feel confident enough to trade large sums of money on sub 20c stock.
would i suggest any of my friends do it? not a chance!
Like everything.......greater the risk, greater the reward. Though the world (and stock markets) are littered with hard luck stories.
I sold out of RFT a couple of weeks back at 4c
If you're thinking of playing the pennies, only play with what you can afford, or better yet, paper trade chosen stocks for 3 months and see how you go. also join our monthly competition so you can see what others have their eye on

 

[Dona Ferentes]

could someone define penny stock please? Are they stocks under 10c ?

 

[divs4ever]

could someone define penny stock please? Are they stocks under 10c ?
I've been trading 20+ years and only now feel confident enough to trade large sums of money on sub 20c stock.
would i suggest any of my friends do it? not a chance!
Like everything.......greater the risk, greater the reward. Though the world (and stock markets) are littered with hard luck stories.
I sold out of RFT a couple of weeks back at 4c
If you're thinking of playing the pennies, only play with what you can afford, or better yet, paper trade chosen stocks for 3 months and see how you go. also join our monthly competition so you can see what others have their eye on

i consider ' penny stocks ' as under $1 , now to be sure many disagree and would say 10 cents or less

i like the $1 upper limit because that dollar limit leaves some small but very invest-able stocks that can still bounce very nicely ( some even pay dividends , regularly )

 

[tech/a]

I agree with Div4 on all counts

 

[Danowazza]

So is there a minimum capital value or minimum volume you all look for?

 

[divs4ever]

i am more an opportunist and investor , i do NOT buy hoping for big wins ( 99% of the time ) BUT if a big win arrives i am likely to take some money off the table

volume is a two-edged sword , plenty of volume gives you a good chance of exiting in profit BUT a tightly held stock ( say PME or BKL )can have big moves often because there aren't so many shares up for sale in a rally ( and FOMO does the rest ) ( that said i have no dread of rarely traded stocks , because i am NOT normally looking for a quick exit for example i have had a sell ( some of ) QBE in for two years , waiting for the right price , if that price stays away for another year it is just extra shares via the DRP

remember a 10% rise is a 10% rise whether it is RFT or BHP the difference is the brokerage ( and the $$$ thrown at the market )

so do you throw $1,000 at a time or $100,000 that decision is all yours ( and your bank accounts )

 

[tech/a]

Amount placed on a stock for me is determined by my risk
I generally use fixed fractional position sizing ( Google if you are not familiar ) risking between 1 and 2 % I have an account used just for this purpose. ( Small caps ) Taking funds at 100 and keeping a min balance of 60

As for liquidity I like to see at least $300000 min traded a day
But if a stock rockets liquidity isn’t a problem to get in or out.

Often I’ll buy half a position if I’m buying a set up.
Full positions if a stock moves as expected and a double position if it goes crazy Doubling during a trade.

 

[charlsie]

So is there a minimum capital value or minimum volume you all look for?

this is kind of relative to your bank account. most of the sub 10c stock i buy is in 100k parcels and i try to get to 1m shares. the reason for this is my ocd likes round numbers and so 1m shares =$1000 moves for every 0.001c change in share price. not for the faint hearted or beginners

 

[Danowazza]

Thanks for the help.. I've always been afraid of not being able to get out when I need to. I'll start looking at the 300,000 share minimum as a benchmark going forward. Still toying with the idea of trading these but the above information will be useful.