Expert: Paul Henneman - 11/19/2010

Question
Say you buy 3000 of the latest hot penny stocks (zane), like what's usually on the running ticker symbol as well, will they sell at 3000 shares at 3-5 pennies above the brought price?  Also what do you have to watch out for (worst case scenirio wise) of the bought stocks not selling? (ex:  level 2 aproximations of not selling stocks...?) etc..


thanks in advance

Answer
Richie,
   Thank you for your question!
Yes, trading penny stocks is tricky.  They are usually very thinly traded, so often the price you end up getting is not what the current price is, there is a gap. It all depends upon if there are shareholders willing to sell.  How much this gap is varies dramatically according to the stock.  The general thing is that the less a stock is actually traded in terms of trading volume, the more this impact can be.
  Once you buy a penny stock, yes you may not be able to sell it. It also depends on if there is anyone willing to buy it, and how often the stock is traded.  Some penny stocks have a fair amount of volume, making this less of a problem. But many penny stocks are very thinly traded, and this can be a significant problem. If the price is dropping and you want to sell, there simply may be no one available who wants to buy!
  Investing in penny stocks is very risky.  Most trades will lose money. However, occasionally a trade will do very well, that is what penny stock traders are after.  My favorite site for penny stock information and research, including suggested trades, is www.TimothySykes.com

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com