Penny stock

Screening Filters

1. Market Cap: $300M to $2B

   • Purpose: Focus on small-cap stocks.
   • Rationale: “Penny stocks” are often very small companies, but setting a lower market cap floor helps avoid extremely tiny, thinly traded names that can be overly risky or illiquid. The upper limit keeps the screen in the small-cap range, which is where many low-priced speculative stocks are found.

2. Price: Max $5

   • Purpose: Identify low-priced stocks.
   • Rationale: This is the core definition of a penny stock in many market contexts. While the exact definition can vary, stocks trading under $5 are generally considered penny stocks or penny-stock-like candidates.

3. Volume: Min 500,000

   • Purpose: Ensure adequate trading activity.
   • Rationale: Penny stocks can be extremely illiquid, which makes them harder to trade and more prone to sharp, erratic moves. A minimum daily volume filter helps surface stocks with enough liquidity for more practical trading.

4. Relative Volume: Min 1.2

   • Purpose: Find stocks trading more actively than usual.
   • Rationale: Relative volume above 1.0 means the stock is trading heavier than its normal activity. This helps highlight penny stocks that are getting attention and may be more relevant for active traders than dormant names.

5. Moving Average Relationship: PriceAboveMA20 / PriceCrossAboveMA20

   • Purpose: Spot short-term price strength or a potential breakout.
   • Rationale: Penny stocks are often volatile and trend-sensitive. Requiring the price to be above the 20-day moving average, or just crossing above it, helps identify names with improving momentum rather than stocks that are simply cheap because they are weak or declining.

Why Results Match:

• The price filter directly targets low-priced stocks, which is the most common way to define penny stocks.
• The market cap filter narrows the search to small-cap names, which are more likely to trade at penny-stock prices.
• The volume and relative volume filters make sure the results are not just cheap stocks, but also stocks with enough activity to be tradable and interesting.
• The moving average filters help prioritize penny stocks showing some technical strength, instead of falling knives or inactive names.

Overall, these filters are designed to find tradable penny stocks with liquidity and some positive momentum, which is usually more useful than returning every stock under $5.