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High Volume Penny Stocks

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High Volume Penny Stocks

When referring to penny stocks the term “volume” means the amount of interest in the stock.  When a stock is trading on high volume it can be safe to assume to interest in the stock is high. However, if the stock is trading on low volume you can assume the opposite. The amount of volume of a penny stock can help you determine how liquid or illiquid the penny stock is. Penny Stock Volume is often affected by news or events that directly affect the company or its industry. For example if a company has just released a press release regarding the launch of a new product or patent it is safe to say that it will grab investors interest in the stock and a sharp increase in volume is set to happen.

For a better understanding of how high volume can effect price let’s look at the real estate market. For example, real estate for the most part is thought to be very illiquid at the moment. Homes are taking a long time to sell and their prices are decreasing dramatically. Now let’s say that you have a house in an average neighborhood that has little or no interest to potential buyers. The house would be hard to sell and in turn you would have to lower the price to attract any buyers. However, if a train station were to be built in your neighborhood only a few blocks away from your house you would see a huge spike in the amount of buyers interested in your house. The fact that house is within walking distance to public transportation makes it that much more appealing to potential buyers who commute to work and in turn you would almost certainly see an increase your property value.

Why is high volume important when trading Penny Stocks?

For example, last month hot penny stock RCYT was trading at an average volume of less than 1 million after PennyStockLocks and other big name Penny Stock NewsLetters StockRockandRoll, StockLockandLoad, and StockBomb alerted our members on RCYT the volume shot up to 11.5 million!!! Over 11x’s the average volume.

What was the result?

After our alert the volume of the stock became massive and the word spread out causing momentum to increase upward and soon RCYT was on its way to becoming the breakout stock of the Summer. Early investors saw gains of +5400%!!! That means if you had bought a modest $100 worth of shares and sold at the high of the day your modest $100 investment would have made you $5400!!!. Not too shabby of a pay day for just pointing and clicking on your computer for a few hours. RCYT is a perfect example of how a stock that was once illiquid became very liquid.

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