Levels play an important role in trading penny stocks as they are a general measure that may allow the penny stock trader to predict where a stock will trade too. Each penny stock will behave differently on any given day, but if you pay close attention, you will begin to get a good feel for the average number of levels that a stock moves when it is in motion.
I could not give you a list of stocks and say that these three will move up an average of six levels and these three will only move four. What I can tell you is that on any given day stocks will exhibit mannerisms that can be loosely categorized as a pattern. One day NTRZ might be particularly strong and move six or so levels every time it makes a run. The next day WWAT might not be as active and only move three levels, and WITM may be moving around a lot more on that particular day.
The only way you will be able to determine these levels is by studying the movements, observing the market makers, and watching the levels like a hawk. This may seem a tedious task, but the best penny stock day traders will always be able to tell you exactly where a stock has just been, how many levels it has moved, and what direction they anticipate it will move in next. This requires extreme concentration and discipline.
When I first got involved in this business, a very savvy trader, who was one of the founding members of modern day trading, told us, "If you concentrate 100 percent of the time, you will be 100 percent effective. If you concentrate 95 percent of the time, you will be 90 percent effective. If you are concentrating 90 percent of the time, go home." These were some of the greatest words of wisdom I have ever heard!
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