Using Stochastic To Trade Penny Stocks

Using stochastic is an easy way to trade penny stocks for those struggling to find a way to trade them successfully. Obviously, they are not foolproof, because….well, nothing is foolproof. You are never going to find a tool that is going to be right 100% of the time. If that’s what you are looking for, you are going to be seriously disappointed.

But as far as stochastic are concerned, you can find this indicator on almost all charting packages that stock brokers provide. If they don’t you can find a lot of free tools online in which you can use this indicator.

The way stochastic work is really simple. You can either trade when both stochastic lines cross or when they are in the oversold or overbought area. However, I personally trade them when both situations are in play.

So if I see both stochastic lines under 20, and about to cross upwardly, then that’s a good time to buy. If both lines are about 80 and are about to cross downwardly, then it’s a good time to sell.

Using this strategy should get you a winning percentage of 65–70%, That could even increase to 80% if you apply other factors.

For example, if you learn some price action techniques to go along with using stochastic, then you could be a full time trader. Learn how to use trendlines, support and resistance, Fibonacci, etc….

There really is no “one way” to trade penny stocks. You just have to figure out what works best for you.

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