[mv_video key=”lwnz17ba8ijxqiwf38z6″ sticky volume=”70″ aspectRatio title=”Penny Stocks on Robinhood” thumbnail=”https://mediavine-res.cloudinary.com/video/upload/lwnz17ba8ijxqiwf38z6.jpg”]I recently discovered a sweet new way to buy and sell stock with ZERO Fees called Robinhood. One of the first things I looked for were penny stocks on Robinhood.
Ya know the idea…
Find one or two penny stocks, put in $100 dollars and then when the stock pops you become a millionaire!!!!
Robinhood Penny Stocks
The idea of Robinhood penny stocks is this. Since Robinhood does not charge you a fee to trade stock, an investor could potentially make money day trading on these penny stocks.
Using a normal broker or other online services these trades would come with it a hefty fee tacked onto which all but eliminates your profit.
The idea with trading penny stocks on Robinhood is this:
Buy $100 dollars of a penny stock.
This would give you 10,000 shares if the stock really were a penny. Most of the time when we talk about penny stocks we are talking about extremely low value stocks. They could be lower then a penny or somewhere in that range.
Throughout the day the penny stock would go up and down. Using the Robinhood app, the day trader would sell high and then buy low.
Repeating this process all day long could net a potential investor serious cash if done right.
Imagine the stock raising a penny… then selling.
You basically doubled your money on one trade.
Sounds simple right???
Honestly if it were that easy, everyone would be day trading penny stocks on Robinhood… but it’s not.
Nowhere on the site or Robinhood app do they talk about penny stocks.
Their mission as a company is to democratize America’s financial system and build a product that allowed everyone access to the financial markets not just the wealthy.
Robin hood Penny Stocks – Can you make money?
If you spend enough time looking for anything you can find evidence that things are possible. This is no different in the case of trying to make money trading penny stocks on Robinhood.
The reality is it is difficult to make a lot of money trading this way and here is why:
Imagine the wallstreet trading floor for a moment.
If you are like me, you picture hundreds of people yelling and throwing papers
Trades happen quick and as a result the price fluctuates up and down quickly based upon whose selling and buying.
For most stocks, fluctuations of a penny or two wont matter much.
Think about the difference between trading 100 shares at $100 vs $99.99. The difference is a dollar.
For penny stocks you are trying to sell in the small window in which the price is up. A penny decrease could cost you any potential profit.
Thats were trading penny stocks on Robinhood breaks down…
Robinhood is not a direct access broker. That means when you click buy or sell they have to work with a broker to buy or sell.
This could take precious time which makes it hard to consistently make money buying and selling penny stocks on Robinhood.
Robinhood Penny Stocks- Advice
Here is some free advice on penny stocks…
Don’t play around with them…
I know they are appealing because they’re cheap, but they are like lottery tickets with WORSE odds.
You will ONLY lose, because in reality there is no market for them.
If you use Robinhood, you can buy stocks with zero trading fees.
Zero, nilche, nadda.
What that means for you is that no good reason to buy penny stocks. You pay the same transaction fee( ZERO) if you are buying quality stock versus garbage penny stocks.
Go ahead and buy single shares of GOOD companies or exchange-traded funds (EFTs), which are similar to mutual funds.
Seriously instead of buy 100,000 shares of crappy penny stocks, put $100 into Robinhood and then buy a single share in four or five quality companies.
THEN JUST WAIT!!!
I know you are going to be excited watching your stock go up and down every minute of the day but resist the urge to day trade.
This is one of fastest ways to lose your investment.
Every month add in another $100, and buy more shares, without worrying about day-to-day price changes.
This is a FAR better method than trying to beat the market day trading or trying to make money on penny stocks using Robinhood or any platform like it.
Remember, Jordan Belfort (the Wolf of Wall Street)???
Yeah this dude….
*Okay it’s Leo… playing Jordan… but you get the point.
He used penny stocks to rob from suckers.
DON’T DO IT…
Still thinking about buying and selling penny stocks on Robinhood???
Keep reading below…
Robinhood Penny Stocks- Trading advice
Ok I know there will still be people out there who think to themselves:
I can do this….
And then try to buy and sell penny stocks.
I get it the lure of making huge profits are enticing.
Here are some quick tips if you do decide your hand at penny stock trading:
Ignore Social Media Penny Stock success stories
Most likely if you are thinking about this, you have spent some time searching online for “winning” penny stocks.
You most likely landed on someones mailing list or a facebook group promoting the next big winner.
They will include screen shots and research behind why that penny stock is going to pop.
The reality is most of those lists or claims are bogus.
Yeah… sorry just because it’s on the internet doesnt make it true.
The problem with these lists is, it can artificially raise the value of these penny stocks.
Let’s pretend I am a Social Media Penny Stock Scammer.
I pick a stock that has relatively low value and relatively low trading volume. I buy a LOT of it…
Then I create an list of penny stocks that are going to pop and blast my emailing list and facebook.
People buy that penny stock which raises the price and then I exit.
I make money and then the stock ultimately falls back to it’s normal level.
Ignore Penny Stock Email newsletters
Plus read the disclaimer at the bottom of those emails.
In some cases they even share that those companies PAID them to pitch their penny stock.
Sell Penny Stocks Quickly
Don’t be greedy. A bird in the hand is worth two in the bush. Instead of going for 100% gains on your penny stock, sell at 20% or 30%.
Will you miss some profit?
But it will also minimize some of your risk.
Using Robinhood for this works because you can make multiple of these 20% gains with zero transaction costs.
That means more profit for you on smaller increases.
Ignore Penny Stock Companies
The premise of stocks is that you own or are invested in a small piece of the company. The company uses that money to run their business.
So be careful. Their goal is to get you to buy their stock so they have more money to operate.
Find Penny Stocks on Robinhood with high volume
Low volume means penny stocks means there is not much trading. When you sell a stock, you have to wait for someone or broker to buy it at that price.
Low volume penny stocks means that people are just not interested in buying that stock.
This WILL impact how quickly you can exist your position.
Identify Sell Stop
No all trades are going to be positive, especially if you are dealing with penny stocks. Before you buy into a penny stock determine what you are willing to lose.
For instance if you bought a penny stock on the Robinhood app for $1 and you think it might hit $2 dollars identify how much are you wiling to lose.
In this case I may say 20 cents.
If the price of the stock hits 80 cents I sell.
Doing this will eliminate emotion out of the equation. It then becomes a calculated risk.
Don’t fall in love with your Penny Stock
Yeah…. It doesnt love you… can we just be friends???
I know it sounds weird but this happens more often then you would think.
Someone makes a trade on their Robinhood app for a penny stock and it pops quickly.
Then rather then exiting before it crashes you hold onto it.
Then you keep holding on to it past your stop point because you think:
“It was this much yesterday. I know it will get back there”
Before you know it, you lost most of your investment.
Try to take out as much of emotions as possible when day trading penny stocks.
Free Stock from Robinhood
One the neat things that Robinhood offers is free stock when you sign up.
Yeah…. I was a bit skeptical as well.
But here is my free stock.
Just over 3 bucks… but that’s FREE money just for clicking sign up.
They claim that the free stock could be worth $3-$150.
If you want to sign up for your FREE Robinhood stock click here.
Robinhood will provide both you and me free stock. WIN WIN.