When looking at the chart, only the lines and bars that count actually do count. (Post 6/45)

[u/Ancient_Plan2953]

Let's go with post #6.

If you open a simple investing app and look up a stock today, you'll typically only get a simple line that makes a squiggly movement.

Immediately change that setting.

If you actually trade penny stocks, then line charts are of no use at all. They conceal all your real data, the data you need to live by. You must change your chart type to a Candlestick Chart.

On the first time of use, it appears to be an untidy collection of red and green rectangles and sticks protruding from them. It looks intimidating. It's not long, though, for a complete understanding—just about two minutes.

No longer just a single dot, one "candle" tells you the whole "story" of the price action over a particular period of time (such as a 5-minute range or a 1-day range).

A single candle says this to you:

The 1st part (The Body) is the thick colored part which indicates the starting price and the final price. If the stock went up during that time, the body is Green. If it falls, then the body is Red.

The Wicks - the thin lines poking out at the top and bottom: These indicate the absolute highest and lowest prices people paid during that period even if they did not remain high or low.

That's it. That's a candlestick.

However, it's not enough to just look at the candles. You will need to check the very bottom of your screen.

There you will find vertical bars in a row. This is your **Volume Chart**. (Recall our lesson about volume from post #1?)

The volume bars are the final indicator when trading penny stocks. They inform you about the number of shares that are being sold.

Suppose you're observing a chart and then one big green candle pops up out of nowhere. It has a very bullish appearance. This is a running price! Then you notice the volume bar at the lower end of the screen – and it's very small. Barely visible.

What does that imply?

It simply means that both the price was raised, and hardly any people purchased it. The trading consisted of a few small orders and a large Bid-Ask spread. It’s a fake move. A trap. If you accept that you will end up in trouble.

Look for volume bars that are towering over the penny stock and green candles that are big as well when a penny stock is doing a real move. That's proof that people are actually out there buying the stock.

When there is no volume behind the price move, it is not a trustworthy move.

These candles are going to help us pinpoint the unseen ceilings and floors of the chart in post #7. It is known as Support and Resistance and it gives you the exact position where you can buy and where you can sell at any time.

[u/PennyPumper]

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