Finding great penny stocks isnt rocket science, especially with the number of websites that explain how to spot and trade them. If you want to handpick your stocks, use all of your available resources.

While these websites serve as great resources, its not quite as easy as looking for fundamentally sound companies and technical analysis to trigger buys and sells. Top penny stock traders know how to spot the best-of-the-best and improve performance dramatically.

Here are four higher-level concepts to help you screen out the mediocre or low-odds penny stock trades you might have otherwise taken.

Insider Buying or Ownership ” Is management putting their own money where their mouth is?

Not that this is guaranteed to prevent a stock from collapsing, but management of a company can be highly motivated when theyre also significant investors of their company. If instead theyre selling some or all of their stock (without a clear reason), it may be a stock other investors should avoid. After all, insiders are more familiar with a company than any ordinary investor could be.

Information about how much stock a companys management owns is a matter of public knowledge. Publicly held companies generally disclose the breakdown in an 8K and/or Form 4 filed with the SEC.

Promoting Program ” Putting a company in the eye of the public is just as important as fiscal success, especially when it comes to penny stocks.

If companies dont promote positive news”be it the Internet, television or even newspapers”potential buyers will be left in the dark. A good public relations plan can make a big difference for a company.

Consistent Volume, Mostly ” Is there actually going to be a market for this penny stock the day you want to get out, and at a decent price?

Make sure you monitor the volume on any penny stock you own. It could make a big difference in the amount of profit you can take off the table.

When it comes to volume, you just need to make sure the pre-surge volume is respectable. High-volume breakouts often spawn new uptrends, so you shouldnt necessarily avoid them.

If you buy a penny stock without doing a little research, you just might find yourself on the losing end of a loser company. It may have been started on a whim, without a plan for growth, or a long-term patent may be close to expiring.

When you consider buying a penny stock, realize that these companies are in early stages of growth. You want to make sure it has a game plan for expansion or a product about to launch that will bring in profits.

Likewise, more than half of all stocks trade at a value under their IPO price within twelve months after their public offering sale. Thats not a problem for a true long-term investor, but it can make things challenging for a penny stock trader who wants to get in early shortly after an IPO. It can take a while for a new stock to settle in and start trading predictably.

Barring a crystal clear reason to make an exception to the rule of thumb, a publicly traded penny stock should offer a trader some sort of contextual history.

Apply these four simple concepts to your penny stock trading strategy, and enjoy success right off the bat.

Obviously the standard advice still applies as well, meaning youll want to continue applying good trading discipline and keeping a close eye on charts and news events. However, adding these four elements to your stock-picking strategy is likely to improve your overall penny stock trading results.

The SmallCapNetwork.com site offers additional trading advice and specific stock picks using the criteria mentioned above. The easiest and fastest way to access the sites comments is by subscribing to the complementary newsletter.

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