E Should You Have Penny Stocks On Your Watch List In April 2021?

Should You Buy Penny Stocks Right Now?

To answer this question, you'll need to have a good understanding of your own risk tolerance. How do you handle volatility? Are you able to hold stocks that go down more than 5-10%? This is a very real thing when it comes to trading penny stocks. Since these types of stocks are known for their big swings in price, both up and down, it isn't unusual to see shares down 5-10% one minute, and the next position is in the green 20-30%. In addition to this, as a trader, do you have an exit strategy? Making sure you're taking profit is obviously the most important part of making money with penny stocks. But emotions can sway your judgment in many ways. "What if it just keeps going a little higher?" That's a question I'm sure you've asked yourself at one point or another.

Take some of the popular penny stocks today (April 21). Alterity Therapeutics (ATHE) gapped up big on Wednesday morning. The company said that it plans to unveil "very encouraging" data to strengthen further the evidence that its lead drug candidate, ATH434, is neuroprotective in brain regions implicated in Parkinson's disease. Overnight, ATHE jumped more than 14%. But then stalled during the regular session. If you were holding the penny stock from earlier in the week, will you take profit or hold?

On the other hand, you've got a company like Asensus Surgical (ASXC). Shares jumped early on April 21st, reaching highs of $1.95 before the lunch hour. This was up nearly 30% from its previous close and was also a bounce off the penny stock's 200-day moving average. While this was a nice 1-day move, it followed a much longer-term downtrend that began in February.

Once again, depending on which side of the trade people were on, ASXC has either been a rock star in the short term or a big bag in the longer-term time frame. As an aside, if you actually purchased the stock before the second week of January, and for some reason, held through the big move, the position is slightly green for the year.

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