The idea of picking penny stocks may sound confusing at first, however there are some easy ways to simplify the process of finding penny stocks to watch. Profiting in penny stocks can be done in a few different ways. First, there is finding a company you want to invest in for the long-term. And then there is penny stock day trading which is what we will concentrate on here. Let's explore some ways to find a hot penny stock using online resources and what you should consider before you jump in and start trading.

Investing in stocks can be risky, but some say that the penny stocks are the most risky. This could be due to the idea that these small cap stocks are associated with new companies that are just starting up. Some financial sources may argue that if someone is going to buy penny stocks they may want to investigate and make sure the company makes at least ten million a year. This may be a good rule to follow for the long-term investor but may not matter much for the day trader who is more interested in price swings and volume to make quick profits.

For the record, stocks valued under five dollars per share are called penny stocks. Their low investment cost makes it easier for smaller margin traders to get involved. Some good advice is to never jump into the market until you have educated yourself and have done a significant amount paper trading. This builds confidence and lets a trader familiarize himself with the ins and outs of the stock market. When a trader is ready, the cheap price of penny stocks can help someone with limited funds get started and learn the ropes with actual real stock plays.

Getting into the penny stock market can give the new trader a chance to improve his skills and trading system without risking too much capital. Many experts advise day trading when it comes to penny stocks. This is because many of these small cap stocks are very volatile. It is best to have predetermined entry and exit strategies and never hold overnight unless you have a lot of experience and stay on top of things.

To find penny stocks to watch it is a good idea to join newsletters, penny stock forums and chat rooms. There you'll find news about companies. This could be an announcement of a new product, service, merger or whatever. Another nice thing about penny stock forums is they offer the beginner free day trading advice, tips and training.

It is best to find a forum with experts and that is not too crowded. This will give you more time to get the help and answers you need from members. Also, look for forums that have chat rooms or message boards so you can watch real stock plays in action and get the help you need. This is great to use along with paper trading to build your skills and confidence. It is also a good idea to continue your education when taking time off. This is how you can become an expert in penny stock day trading.

Basically, starting out in the penny stock market gives you the chance to see what trading and buying stocks is all about. It is a good place to start for the beginner and many become very good at making money with penny stocks. Just remember the market is very volatile and you should never risk more than you can afford to lose. It is a good practice to spread your risk with many small trades every day and have a trading system that you understand and stick to.

For more information on penny stocks to watch please visit this friendly Penny Stocks Forum. It's free to register and full of valuable advice and penny stock alerts from experts.