| To buy or sell penny stocks, there are two types of | | | | you get the shares at that price, or an even more |
| trading orders: | | | | advantageous one. You can also use limit orders |
| 1. market orders | | | | when you are selling, giving up the shares only if you |
| 2. limit orders | | | | get the price you choose, or an even higher one. |
| Penny Stock Market Orders: You trade the penny | | | | With a limit order you can decide that you will not |
| stock at the best currently available price. With a | | | | pay more than $X per share. You won't overpay, but |
| market order to buy, you pay whatever the current | | | | you are also not guaranteed to get any or all of the |
| market (ask) price is. With large orders in thinly | | | | shares you wanted. Imagine that you decided to buy |
| traded penny stocks, this can result in your purchase | | | | ABC stock, but didn't want to pay more than $1.25 |
| pushing the price up while you are buying, and | | | | per share. Using a limit order at $1.25 protects your |
| potentially costing you more per share than you had | | | | maximum cost. If the only shares for sale are asking |
| expected. | | | | $1.40, your trade won't take place at all, but at least |
| Imagine you entered an order to buy 1,000 shares of | | | | you didn't pay more than you had wanted. |
| ABC stock. You'll get the 1,000 shares, but if the | | | | I don't give trading advice, and you must decide |
| lowest ask (the price sellers are willing to accept) at | | | | what's best for you, but I will give you my strong |
| that time is $1.40, then you end up paying $1.40 per | | | | and educated opinion. It is always best with penny |
| share. If the lowest ask had been $1.95, then you'd | | | | stocks to use limit orders rather than market orders, |
| pay $1.95. That's quite a difference in price! | | | | and this applies for both for buying and selling. |
| You can probably see why using a market order can | | | | If you buy with a market order, you might end up |
| result in potentially paying more than you had | | | | paying more than you had wanted. Beginning traders, |
| expected - you had no control over the price you | | | | when it comes to penny stocks, should only and |
| ended up having to pay. With penny stocks, paying | | | | always use limit orders. |
| more than you wanted to is common when you use | | | | Once in a while, it may be appropriate for more |
| market orders, so traders need to protect | | | | experienced traders to use a market order. For |
| themselves. | | | | example, sometimes when I'm aggressively |
| Thankfully there is a way to do so, and it's called a | | | | accumulating a position, I use market orders to |
| limit order. | | | | snatch up big blocks of shares. However, I do not |
| Penny Stock Limit Orders: You specify the price you | | | | suggest this approach to anyone except highly |
| are willing to pay. You decide what price you will pay | | | | experienced traders. |
| for the shares, and the trade will only take place if | | | | |