When compiling your penny stock watch list, you only have two basic requirements to look out for. First, the penny stock must have sufficient trading volume of at least 50,000 shares since anything less than that can be a sign of too little interest on the stock under consideration. But you must also consider the factor of insider trading wherein just a few people are moving the penny stocks to make it seem that it has a high trading volume.

Second, the penny shares in your list must have a high degree of volatility. Basically, you are looking for penny stocks where traders can purchase the stocks at or near the support levels on one hand as well as sell at or near the resistance levels on the other hand. Look at the price level, which should allow any sensible penny stock trader to cash out and cash in on the profits.

Of course, these two basic requirements for inclusion in the penny share watch are just that - basic. You still have to consider other factors in the choosing especially as penny shares are high-risks albeit high-rewards investments of sorts. Also, we understand if it will take time, effort and, of course, money before your watch list for penny stock becomes reliable and profitable.

But before you can even compile your watch list, we recommend thinking things over in regard to your involvement as a penny share trader or investor. We cannot overemphasize the fact that these shares are not for every trader or investor, not even the savviest one in the bunch for many reasons.

For one thing, these shares are highly volatile securities that can rise and fall in mere seconds. Since it is not as highly regulated as the stocks of the blue chip companies, the risks for losses are higher. For another thing, effective monitoring of your stock holdings requires the proper mindset, attitude and approach, not to mention the time and effort on research necessary. Even your penny stock watch list today may not be applicable two days from now and, thus, it will require almost constant monitoring.

But if you have the time to monitor, evaluate and analyze the penny shares on an almost daily basis, then becoming a penny share investor or trader is the right path for your wealth-building activities. You have to possess a personal computer with an Internet access so as to be able to check the stock prices at a moment's notice, usually between 8 to 12 times daily depending on your stock holdings.

Aside from the prices, you also have to monitor the bid and ask lots, the market movements and the industry conditions, to name a few other factors. With such a fast-changing environment, it is no surprise that the watch list for penny shares changes fast, too.

The rewards for all your time, effort and money, fortunately, more than outweigh the costs. With the right stocks on your penny share watch list, you can proceed to buy and sell the stocks to your advantage - increasing your wealth a few thousand dollars at a time, that is. You might even be able to afford setting up your own micro-cap company and let others trade or invest in the penny stocks.