Penny Stocks on Trading 212 UK 2024: A Beginner’s Guide

Penny stocks are a great way in to the stock market for beginner investors or those looking to invest in smaller, lesser known companies. Trading 212 has made it easy for UK investors to trade penny stocks. In this article we will cover penny stocks, how to trade them on Trading 212 and key tips to be successful and manage risk.

What are Penny Stocks?

Penny stocks are shares of small companies that trade at low prices, usually below £1 or $5 in the US. These stocks come from companies with lower market capitalisation, meaning they have less overall value than bigger companies. As a result penny stocks can be very volatile but also offer big returns.

In the UK, Trading 212 allows investors to access many penny stocks so they are a great option for those with limited capital. These stocks can be found on the main exchanges like the London Stock Exchange (LSE) and smaller over-the-counter (OTC) markets.

Trading UK Penny Stocks on Trading 212

Trading 212 is a easy to use platform that gives you access to penny stocks. It’s commission free so you can buy and sell shares without extra fees which is perfect for low priced stocks.

1. How to Find Penny Stocks on Trading 212
   • Trading 212 has a simple way to find penny stocks. You can browse the penny stocks list within the platform or use the search function to find specific stocks by name or ticker.
   • To find penny stocks on Trading 212 you can filter stocks by price or market cap to focus on low priced options. Monitor the stock performance through the platform’s charting tools and set alerts for price movements to take advantage of opportunities.
2. Trading 212 Penny Stocks List
   • Trading 212 updates its penny stocks list regularly so you can have a curated list of low priced stocks. This list will help you find stocks that may have big growth.
   • Examples of UK penny stocks on Trading 212 are companies from mining, technology and pharmaceuticals sectors. These sectors have emerging companies with growth potential.

What is Day Trading Penny Stocks?

Day trading penny stocks means buying and selling low priced shares within the same day. The goal is to make money from small price movements in a short period. Since penny stocks are very volatile they can move fast so day traders can take advantage of these movements.

1. How to Start Day Trading Penny Stocks
   • To start day trading penny stocks you need to have a good understanding of technical analysis and trading strategies. Trading 212 has charting tools and indicators to help you identify trends and make informed decisions.
   • Setting up a demo account on Trading 212 is a great way to practice before putting real money. This way you can test your strategies and get familiar with the platform.
2. Key Day Trading Strategies
   • Scalping: This strategy involves making multiple daily trades to capture small gains from price movements. You need to be fast and have real-time market data which Trading 212 provides.
   • Momentum Trading means trading based on stock price momentum. You buy a stock when it’s trending up and sell it when it starts to decline.

Risks and Rewards of Penny Stocks Trading

Trading penny stocks on Trading 212 can be very rewarding but due to their volatility it also carries big risks. Prices can go up or down fast so you need to have risk management strategies.

1. The Risks of Penny Stocks
   • Low Liquidity: Penny stocks have low trading volumes so buying or selling large amounts can move the stock price.
   • High Volatility: These stocks can be unpredictable and price movements can happen fast. Investors should be prepared for sudden losses.
2. Rewards of Penny Stock Trading
   • High Growth Potential: While risky some penny stocks can deliver exponential returns. Small cap companies that grow big can reward early investors big time.
   • Low Entry: Penny stocks allow you to enter the stock market with small investment so it’s more accessible to a wider range of investors.

How to Start Day Trading Penny Stocks on Trading 212

Getting started with day trading penny stocks on Trading 212 is easy:

1. Create a Trading 212 Account: Sign up for a free account and try the platform. You can start with a demo account to practice trading with no financial risk.
2. Fund Your Account: Once you’re ready deposit funds into your account to start trading. You are trading 212 which means commission free trades so it’s very cost effective for penny stock trading.
3. Find Penny Stocks: Use the penny stocks list or search function to find stocks to trade. Look for stocks with high volumes and clear price trends.
4. Set Up Alerts: Trading 212’s alert feature will notify you of big price movements. This will help you to act fast and make profitable trades.
5. Use Automated Trading: To minimize risk use Trading 212’s automation tools such as setting stop-loss orders.

Top 10 Cheap Stocks and Shares to Watch in the UK

If you’re looking to add some cheap stocks to your portfolio in 2024 there are several UK based options with growth potential. These stocks are cheap but operate in industries with big room for growth from mining to entertainment and healthcare. Let’s take a look at these top 10 cheap stocks and shares to watch:

Wishbone Gold

Wishbone Gold is a small cap company in the mining and exploration sector with focus on gold and precious metals. They operate mainly in Australia and has a big presence in gold rich areas. As global demand for gold continues to rise – driven by economic uncertainties and need for safe haven investments – companies like Wishbone Gold will get more attention from investors. The stock is cheap and has growth potential so it’s a good option for those interested in the mining sector.

Upside: With their ongoing projects and the growing demand for gold there’s room for big gains if they hit their targets.

Kodal Minerals

Kodal Minerals is another mining company, focused on lithium exploration in Africa, specifically in the Bougouni Lithium Project in southern Mali. Lithium is a key component in electric vehicle (EV) batteries and as the world goes green the demand for lithium will go through the roof. Kodal Minerals’ cheap stock is an entry point for those who want to benefit from the growing demand in the EV and renewable energy sector.

Upside: The growing global demand for lithium especially with the EV boom could be a growth path for Kodal Minerals.

Harland and Wolff

Harland and Wolff is a historic British company famous for its shipbuilding heritage including the building of the Titanic. Today it operates in marine engineering, ship repair and offshore wind energy. Its role in the renewable energy sector, especially in building infrastructure for offshore wind farms will be a growth area as the UK goes green.

Upside: With the UK going green and offshore wind power Harland and Wolff could see a demand for their services again.

Cineworld Group

Cineworld Group, a big cinema chain, had a tough time during the pandemic with lockdowns and cinema closures and a big drop in revenue. They even flirted with bankruptcy. But with cinemas open and movie goers back, there’s a chance for recovery especially if the big movies perform well. Cineworld is a high risk investment due to their financial troubles but the stock is cheap so if you’re willing to take a punt on the entertainment sector’s recovery.

Upside: The recovery of the global cinema industry could lead to big gains if Cineworld can get through their debt issues and benefit from increased cinema attendance.

Amigo Holdings

Amigo Holdings is a UK based lender that provides guarantor loans, financial solutions for individuals who can’t get credit from traditional banks. Despite being under regulatory scrutiny and having big financial hurdles in the past the company is working on a recovery plan. It’s a speculative stock but there’s potential for a turnaround if they can fix their regulatory issues and rebuild their customer base.

Upside: If Amigo can get through their regulatory issues they could benefit from a niche market of underserved borrowers.

Escape Hunt

Escape Hunt is a company that specialises in live escape room experiences, a growing trend in entertainment. They have physical and virtual escape rooms in various locations across the UK and globally. As entertainment venues bounce back post pandemic experiential activities like escape rooms are getting popular. Escape Hunt’s cheap stock is an entry point for those who want to invest in the growing experiential entertainment sector.

Upside: With immersive experiences and social gaming on the rise Escape Hunt is well placed to benefit from this trend.

Anglo African Oil & Gas

Anglo African Oil & Gas is an oil and gas explorer and producer in Africa, focused on the Congo. Oil and gas stocks are seen as unstable due to commodity price fluctuations. But with the recent energy crisis prices have gone up and companies like Anglo-African can take advantage of the market. Investors looking to play the energy sector growth might find this stock cheap and attractive especially with their strategic assets.

Upside: Global energy demand and oil price fluctuations could be good for Anglo African Oil & Gas.

Iofina

Iofina is a specialist chemical company that produces iodine from brine water from oil and gas wells in the US. Iodine has many industrial uses, medical, agricultural and photographic products. As global demand for iodine increases especially for medical applications Iofina is well placed to benefit. They focus on sustainable production methods which aligns with the growing environmental concerns. Could be a good one for the future.

Upside: Global iodine demand especially in healthcare and tech industries could be good for Iofina.

Ferro-Alloy Resources

Ferro-Alloy Resources is a mining company that produces vanadium. Vanadium is a metal used to make steel. It’s also used more in energy storage like vanadium redox flow batteries. Industries are looking for better energy storage solutions. Vanadium is becoming critical for large scale battery technologies. With the move towards renewable energy sources vanadium demand could see big growth in the next few years.

Upside: Renewable energy storage demand could drive vanadium demand and give Ferro-Alloy Resources an edge in the market.

Omega Diagnostics

Omega Diagnostics is in the healthcare sector producing various diagnostic products for infectious diseases, food intolerance and allergy testing. They got attention during the COVID-19 pandemic for their rapid test kits. COVID-19 product demand has gone down. But Omega Diagnostics is still focusing on healthcare products that are in demand in other areas. They can adapt to changing healthcare needs, makes them an exciting one in the healthcare space.

Upside: Diagnostics is a stable growth path for Omega Diagnostics.

Risks and Mistakes When Trading Cheap Stocks

Trading cheap stocks is attractive because of the low price and big potential. But the cheap stock market is full of risks and requires careful approach to avoid costly mistakes. Here are the risks and common mistakes when trading penny stocks.

Risks of Trading Cheap Stocks

1. Low Liquidity: Cheap stocks trade on low volume, fewer buyers and sellers in the market. Low liquidity means you can’t enter or exit positions at your desired price. If a stock has low liquidity even a small trade can move the price dramatically and you get unfavorable trade executions.
2. High Volatility: Cheap stocks are known for their wild price swings. A stock trading at just a few pence can move based on rumors, market sentiment or small changes in volume. While volatility can bring big gains, it also increases the risk of big losses.
3. Lack of Information and Transparency: Unlike larger established companies, many cheap stocks are small or emerging companies with limited financial reporting. These companies may not be required to follow the same disclosure rules as those listed on main exchanges. So it’s hard to get reliable information about a company’s financials or business model and you make uninformed investment decisions.
4. Scams and Manipulation: Cheap stock market is notorious for scams like “pump and dump”. In this case a stock is artificially inflated through misleading promotions or false claims to lure investors and then insiders sell their shares at a profit and new investors are left with big losses. The lack of oversight in the cheap stock market makes it a playground for manipulators.
5. Delisting Risk: Many cheap stocks are traded on OTC markets rather than main exchanges like the London Stock Exchange. Stocks that consistently trade below a certain price may be delisted from main exchanges and that can lead to low liquidity and difficulty in selling your shares.

Summary

Cheap stocks on Trading 212 is a great opportunity for investors. You can find low cost stocks with high growth. Cheap stocks are risky because they are volatile and have low liquidity. But Trading 212 has tools and features to manage those risks. Learn about cheap stocks on Trading 212. This will help you grow your portfolio. Whether you day trade or long term investing.

Use Trading 212’s features and day trading strategies to find cheap stocks. This way you can benefit from the volatility and opportunities in the UK penny stock market.

Summary:

• Cheap stocks is a low cost way to invest in emerging companies with high growth and risk.
• Trading 212 has cheap stocks with commission free trading and advanced charting tools.
• Day trading cheap stocks requires a strategy and risk management especially in a volatile market.
• Use Trading 212’s cheap stocks list and set up alerts to make smart decisions and take advantage of price movements.

FAQs

What are cheap stocks on Trading 212?

Cheap stocks on Trading 212 are low cost stocks trading under £1. They are smaller companies listed on UK exchanges with high growth and higher risk.

How do I start trading penny stocks on Trading 212?

Create a Trading 212 account. Deposit some money. Use their stock screener or cheap stocks list to find the best ones. You can also set up alerts and use risk management tools like stop-loss orders.

What is day trading penny stocks?

Day trading cheap stocks is buying and selling stocks within the same day to profit from small price movements. Trading 212’s real time data and commission free trades makes this possible.

Is it safe to trade penny stocks?

Cheap stocks can give you high returns but they are also very volatile and higher risk. To protect your investment you need to research and implement risk management.

Can I use automated trading tools on Trading 212 for penny stocks?

You can. Stop-loss orders and price alerts.