Many new investors are lured to the appeal of a penny stock due to the low price and potential for rapid growth which may be as high as several hundred percent in a few days. Similarly, severe loss can occur and many penny stocks lose all of their value in the long term. Accordingly, the SEC warns that penny stocks are high risk investments and new investors should be aware of the risks involved but you can even make very big money. These risks include limited liquidity, lack of financial reporting, and fraud. A penny stock is a common stock that trades for less than $5 a share. While penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets, they may also trade on securities exchanges, including foreign securities exchanges. In addition, penny stocks include the securities of certain private companies with no active trading market. Although a penny stock is said to be "thinly traded," share volumes traded daily can be in the hundreds of millions for a sub-penny stock. Legitimate information on penny stock companies can be difficult to find and a stock can be easily manipulated.
Stock prices fluctuate every moment. The stock price of Amazon ranged from 352.08-359.68 today. If it was noon and the Ask was $358.00 I would Buy at $357.00 knowing that someone would post a Sell at market price. As you will note, the price had dropped to $357 by 1:00.
I do the same thing with a Sell. If I posted at noon with the price still at $358 I would Sell at $359. The price had risen to my asking price by 2:00. I never buy or sell at market because you have no control over the price,
Since you only buying a small number of shares, your order if enetered properly will get an immediate execution.
Buy orders are executed at the best offering price, while sel orders are executed at the best bid price.
However, you are trading in very small lots therefore you will receive an execution within the quotes.
I have been reading about investing online and want to open an online brokers account with a provider such as E*Trade, Scottrade, etc. I know that you can buy and sell stocks on the account but have a question about the stock pricing. Say you go to buy an Amazon stock that has a Bid price of $300.00 and an Ask price of $300.05 and I put in a buy, limit order, of 15 shares for $300.05. Is it pretty reliable that I will be able to buy these shares at the Ask price or do you usually have put in a limit order of greater value that the Ask price, say $300.10 to get the shares I want? I have this same question about selling shares. Say that I want to sell 15 Amazon shares when the Bid and Ask prices are the same. Could I be fairly certain that I could sell these shares at the Bid price of $300.00 or would I have to sell them at a lower price, say $299.95? Sorry if the question is a bit difficult to answer, I just want some insight on the details before I put any money up.
