Some people might think that there are single penny stocks to be focused on in the micro cap markets, but that simply isn’t the case. There is practically no such thing as a hot penny stock. Penny stocks are for trading, not owning, so any value a penny stock might accumulate would be essentially lost overnight when the market corrects itself. So how can the average trader find the best opportunities for trading penny stocks?

I use a number of penny stock alerts to keep myself posted on the biggest price action in the coming weeks. Whenever a stock is listed in my alerts system as a potential price breakout, I immediately open up my trading platform and look for an entry point. Here’s an example of some of the  penny stock breakouts I’ve been in on recently in 2010:

MDCE: Jumped from .36 per share to .54 per share, a price increase of 50 percent

CBTE:  Jumped from .47 per share to .96 per share in a few days, a price increase of over 100 percent

GORX: Went from .38 per share to .74 per share in a single day on January 22^nd

Penny stocks are essentially fueled by hype, and every single penny stock in existence has traders who believe that this is the big moment for this small company to break out of its shell and become a highly valued stock with tremendous share prices. If a micro cap transitions to a mid or large cap stock, the shareholders can easily see their investments multiply several hundred times in the course of a few months.

The best penny stocks this year are clearly going to come from the healthcare and energy sectors. Why? Because these are both sectors that desperately need innovation, not only to make these services more affordable and manageable but also to manage impending crises we have in both sectors. The companies whose penny stocks explode are going to be the ones with a true competitive edge on the market, which can be gained with technology in these fields.

My advice is to stay on the edge of penny stocks with alert services that have a good record of picking profitable trades before they occur. The system I’m currently trading and recommend to most people can be seen here. If you want to know what penny stocks are going to explode in 2010, I recommend checking it out and seeing for yourself before the opportunities start to disappear.