RSSBuying sub penny stocks?
Wednesday, May 19th, 2010
I am trying to buy a sub-penny stock on OTC:BB and the price of it is $0.0001. I know these stocks are quite risky in that you can gain or even lose 100% or more if your investment. However, there is one particular stock I have been watching and I see a pattern in in. At least twice a day it goes from $0.0002 to $0.0001 and back to $0.0002. I’m guessing this is a safe sub penny stock because its an ongoing pattern where you can get in at $0.0001 and sell at $0.0002 and make 100% of your gains. However, I have a couple questions about this to insure this strategy can work:
1. How does the Ask Bid and Ask Sell effect this whole process? What does it mean? For this particular sub penny, the Bid (Size) is now: $0.0001 x 5,000 and the Ask (size)is now: $0.0002 x 5,000. What exactly does this mean?
2. I read something on Investopedia that “penny stocks can be hard to sell if no one is in the market for the company shares you’re holding.” What are they saying here? Does that mean that someone needs to buy the shares from me? If so, how does that work?
3. How long does it take to fill the order of 2M shares?
I’m an investor of 3 years and never bought sub pennies. I hear they are risky, but can still be beneficial. I have an order pending for 1 day and am wondering how long will they fill this order. Your help is greatly appreciated.
do not trade in that stock you will lose all your cash.you nead to know how many shares trade per day and dont trade more than 1% of days volum.
1. The bid means someone is willing to buy the stock for $0.0001/share. The ask means someone is willing to sell for $0.0002/share. The size is, well, the number of shares.
2. It means you could buy a lot of shares as planned, but then you may have a great deal of difficulty selling them. Yes, you cannot sell shares without someone who wants to buy them. In penny stocks, that could be a long wait.
3. How long it takes to buy 2M depends on who is willing to sell shares at the price you are offering, and how many shares they have. For selling, the same thing except you need buyers. In penny stocks, it may be quite a while to wait.
In fact, in penny stocks if you buy 2M shares you may find that you are in fact The Only Significant Buyer which will make it kind of hard to sell later.
You just have to question your business model in getting into these things — is it just like buying a lottery ticket for you? If so, fine, just know that you will have about the same results as buying a lottery ticket; i.e., you’ll almost certainly lose money.
Hmm, so what your saying is that this stock generally goes from .0001 to .0002 and back again repeatedly. The issue i have is this
1. Each time your price changes from 2 to 1 you will lose 50% of your money, this is the issue with all penny stocks is that a tiny change means a huge loss / Gain. Now it could be a gain, but you should be more concerned about the loss.
2. I dont know if Safe is the right word for this. safe is money in your savings account. Money in a stock is at risk. regardless of how solid a pattern is. im not saying dont invest. (i’m a trader myself) but you need to invest to either make profit or get dividends.
3. (related to 2.) If the stock only ever goes from 1 – 2 and back then your money isnt growing. so what is it doing? You may as well have it in the bank.
I dont recommend penny (or sub-penny) because they maybe are not any better then bigger stocks, and they aren’t more likely to grow then bigger stocks. they could also be worth ZERO tomorrow.
PS, if you are in order of these stocks now, and asking questions, (which means to me that your not sure), close that order ASAP.
The process of stocks is that people buy and sell stocks to each other, so yes you need to sell stocks to other people who want to buy them for your price, just like now you have an order to buy off people who want to sell at your price.
Stocks dont materialize out of thin air, when you place an order.
One the OTC, you usually have to buy and sell to the market maker. I suspect that the market maker is offering to buy stocks at .0001 and sell them at .0002. The bid price stays at .0001 and the ask price stays at .0002. When the market maker sells stock at .0002, then the price “rises” to .0002; When the market maker buys stock at .0001, the price drops to .0001. You can’t buy the stock at .0001 and sell at .0002, only the market maker can. You can only buy at .0002 and sell at .0001.
“$0.0001 x 5,000 bid” means some sucker out there is willing to buy 5,000 shares at 0.01 cents each. So filling an order for 2M shares would take four hundred trading days, or approximately two years.
Yes, some other idiot has to be willing to buy the shares otherwise a sale will not occur….
For every sale, of any share of stock… there has to be a buyer & there has to be a seller. in this case think of trying to sell a used car that no one wants. If you’ve been investing for three years… who did you think was selling you shares? Who did you think was buying your shares? The answer is simple… people or institutions that had the opposite opinion as you.
How long will it take to fill your order? As soon as someone else is willing to take the opposite position as you….. that could be in seconds…. or never.
Did you really think you’ve discovered a magic way to double your money? You need to read a few basic books on investing.