As a rule I wont touch anything with less than 4.0M market capitalization. Also I make sure the average ten day volume is 10 times greater than my potential stock purchase.
Granted they are still risky but that tends to weed out the dirty companies.
You should really look at P/E ratios, shares outstanding, & insider/institutional transactions.. If a company is making money, has a low float, and insiders AND institutions are buying, its a startup, and shares are at a realitively cheap forward P/E valuation, and has a new product/technology that I think is cool, THAT would get my attention.. Market cap means nothing in penny stocks, and 10 times whatever you can buy with $1000 might as well be 10 shares a day. Hardly weeding out any BS compaines.. I've seen total scam companies with market caps of 10M+ and their shares be worth $0.10 or less with nearly a billion shares outstanding.. Only Suckers own that crap.
All I'm gonna say is that you'll make a hell of a lot more money buying companies that actually make money and create tangible value than you will chasing penny stocks. Trust me. If you must, add them to your watch lists and be very calculated in your trading if you're gonna dive into something, but really I'd say dont even bother until you see way above average volume with institutions buying..
Oh and one more thing, market makers are bastards.. Watch your stock like a hawk if you're, in and never set stops. They can swoop in and take out weak hands before you can blink an eye. I've seen it many many times..
