Interest in penny stocks has been on the rise. Many beginner traders hear stories of friends and colleagues who have struck it big and dream that they too can do the same. Understandably, this underlying greed is what fuels aspirations of buying a stock for mere pennies and then selling it for a substantial profit. Unfortunately, just as often such inexperienced investors lose their shirts on these volatile investments and walk away wishing they had heeded the warnings. That said — and obvious risks aside — trading penny stocks can work out. (For more, see: How is a penny stock created? and How to Invest in Penny Stocks .)

For those new to the market, it’s important to note that many — if not all — large institutional investors, such as mutual funds, index funds and large money managers, have rules in place that prevent them from trading penny stocks. This corresponds with minimal analyst coverage. In the article below, we’ll take a look at what penny stocks are actually trending right now and the fundamental and technical aspects that should be considered before taking a position. (For more, check out: The Lowdown on Penny Stocks .)

Minco Gold – 135.29% YTD

As you can see from the chart below, Minco Gold Corp. (MGH ) has been trading within a strong uptrend since the beginning of the year. The sharp move in late January and early February was on very heavy volume, which suggests that the gold bugs are keeping a close eye on this stock and that speculators are starting to enter into positions. Interestingly, MGH announced on Feb. 3 that the company was not aware of any material undisclosed development that would lead to the upward movement in its share price. In late July, the company disposed of its non-core asset known as the Gold Bull Mountain Project. Fundamentals will be keeping a close eye on how the management team chooses to reallocate the funds from this sale. It wouldn’t be surprising to see bullish traders start to enter positions at current levels and accumulate more as the price nears the trendline. Traders will likely protect their positions by placing stop-loss orders directly below the 200-day moving average, which is currently trading at $0.35. (For related reading, see: Catching a Lift on the Penny Express .)

Dejour Energy – 120.00% YTD

Dejour Energy Inc. (DEJ ) is a small-cap oil and gas company that has had a tremendous year so far in 2014. For those who don’t follow this stock, Dejour Energy is head quartered in Vancouver, Canada, and holds an interest in 88,500 net acres of oil and gas leases in the Peace River Arch of northwestern British Columbia. In Q1, the company significantly increased its production, which equated to a 37% increase in revenue and positive operating cash flow. Such positive results have led to a share price gain. As you can see from the chart, the stock is currently trading near significant support of an ascending trendline. It wouldn’t be surprising to see bullish energy traders start accumulating a position at current levels. From a risk management perspective, stop-loss orders will likely be used to protect any long positions. The most likely placement for a stop-loss order would be directly below the 200-day moving average, which is currently sitting at $0.20. (For more, see: Understanding Small- and Big-Cap Stocks .)

Lake Shore Gold Corp. – 116.28% YTD

Lake Shore Gold Corp. (LSG ) is a $420 million mining company that also has the attention of penny stock investors and gold bugs alike. In late July, the company reported record operating results with a 70% increase in production relative to the same period in 2013. The company reported production of $52,300 ounces with a cash operating cost of $556 per ounce sold, which was 39% better than the prior year. Strong operating results have acted as a catalyst for a higher share price. From a technical perspective, the recent pullback from its swing high of $1.28 toward the trendline is creating an interesting buying opportunity. The recent drop back below the $1 level puts LSG back into penny stock territory and is likely being added to many watch lists. Traders will likely add to their long positions as the price nears the combined support of the ascending trendline and the 200-day moving average. It may also prove strategic to watch for other indicators such as the MACD and RSI to confirm a move higher before jumping in. Stop-loss orders will likely be placed directly below the 200-day moving average, which is currently trading at $0.78. (For more, see: Small Caps Boast Big Advantages .)

The Bottom Line

Penny stocks generally do not get much attention from the investment community because of the lack of interest from mutual funds, index funds and large money managers. In this article we’ve taken a look at the top trending penny stocks so far in 2014. Based on the charts, it appears that there may very well be much upside left. Active traders will likely put the names mentioned above on their watch lists and look for them to start accumulating positions near the identified trendlines. (For more on this topic, see: Small-Cap Research Can Have a Big Impact .)