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As a Darvas System trader, I typically avoid “penny stocks.” (I define “penny stocks” as low-priced stocks, anything under $10.)
The reason for this avoidance is that low-priced stocks are more easily manipulated and often swing wildly.
Following a trend is much easier when price action remains fairly stable. In such conditions, you’re able to avoid getting whipsawed out of positions during “normal” pullbacks.
However, you can use a trend-following method like the Darvas System to profit with penny stocks. It’s riskier and rarer, but every so often a penny stock comes along that would have worked perfectly with Nicolas Darvas’ method. [click to continue…]
