How to Trade Penny Stocks: Indicators, Low Float Scanners & Price Action Setup In ThinkOrSwim

[newtrader19]

whats the best penny stock algo? i know none are 100$ win rate. anything decent? thanks

 

[BenTen]

Check to see if you can find anything here https://usethinkscript.com/google-search/?q=penny+stock

 

[newtrader19]

For me the Climax Detector
https://usethinkscript.com/threads/climax-detector-w-traps-for-thinkorswim.22358/
sometimes it works and sometimes im not sure what the best one to trade, im trying penny stocks

 

[useThinkScript]

Penny Stocks
Applying the majority of the indicators on this forum—which are designed to alert to changes in institutional interest—to penny stocks with zero institutional interest is like using a map of Tokyo to navigate the streets of London.

The Climax Indicator https://usethinkscript.com/threads/climax-detector-w-traps-for-thinkorswim.22358/
that you referenced was created specifically to track algorithm behavior.

We know what drives big algos: we can recognize where institutional interest will absorb buyers/sellers, where they will exhaust, and where traps will be sprung. The author of that indicator, @atcsam is the forum's resident expert on those algorithm moves.

Sadly, you will find no institutional interest in most penny stocks.
This is because pension funds, mutual funds, and major trading desks are precluded from these low-priced equities by internal mandates, liquidity requirements, and balancing quotas.

The Climax indicator can highlight your key levels but it is not the best tool as the other 90% of the code does not apply to penny stocks.

Bottom line: Most institutional strategies on this forum are contraindicated for penny stocks.

How To Trade Penny Stocks
VIPers can use the low float scanner found here:
https://usethinkscript.com/threads/stock-profiles-based-on-float-and-institutional-interest.22681/#post-164189
(There are also plenty of 3rd-party scanners just a quick search away.)

Once you have your corral of low-floaters, monitor your social feeds. Penny stocks move primarily on breaking news, PR, and momentum rumors.

Penny Stock Indicator Setups
1. Key Levels are the best friend to all types of traders. VIPers can use:

https://usethinkscript.com/threads/the-vip-support-target-engine-with-risk-reward.22181/​

​

And here are the top 200 support and resistance scripts on the general forum sorted by popularity:​

https://usethinkscript.com/search/2687469/?q=supportxresistance&t=post&c[title_only]=1&o=replies&g=1​

2. VWAP Add the ToS built-in VWAP study or one of the customized versions on the forum:

https://usethinkscript.com/search/2687447/?q=vwap&t=post&c[title_only]=1&o=replies&g=1​

3. Pure Price Action Lowest-timeframe penny stock traders trade 100% on price action. Read more here:

https://usethinkscript.com/threads/price-action-toolbox-for-thinkorswim.10747/​

VIPers can add the newest price action study:​

https://usethinkscript.com/threads/the-vip-heiken-ashi-price-action-intent.22666/​

4. Relative Volume (RVOL) You need a relative volume strategy to catch the surges.

Here is the most popular:​

https://usethinkscript.com/threads/relative-volume-strategy-and-momentum-scanner-for-thinkorswim.3002/​

Here are the other 200 relative volume indicators:​

https://usethinkscript.com/search/2687456/?q=rvol&t=post&c[title_only]=1&o=replies&g=1​

@newtrader19 hope this helps,


mod note:
Forum Members!

Shout out below with what indicators or low-float scanners have you all had the best luck with for penny stocks?

 

[Riverplacedad1]

Any kind of breakout scanner will work well, and Rate of Change also works.

Scan:

$0.50 up to $20.​

Shares 300K up to 40M.​

Volume of at least 300K,​

and like to see a volume of 10K/5min.​

Each day Premarket Watchlist, I log the best stocks that have broken out into a MarketWatch table (I use ThinkorSwim).
I have

Vol,​

shares,​

5 min vol,​

daily Rvol,​

rate of change,​

and Force Index (higher the FI the greater the move),​

Mark% change,​

and %change from the open.​

Since ThinkorSwim scans are slow to refresh I monitor Zendoo (also gives me halt info).

As far as Charts I have the

5 min and​

1 min (which I will alternate to 400 ticks to refine entries).​

As far as Indicators go I like

LaguerreRSI amd Fractal Energy​

and obviously volume.​

I use a 21 Hull on my 1 min​

and a 21weighted MA (to see the divergence of the Hull vs Weighted).​

I also like the autogenerated anchored Vwap by electrified. Seems very accurate on 400tick and 1 min for resistance and support and will use it on a 4 Hr for large timeframe resistance and Support (big believer in Brian Shannons work on anchored Vwaps)​