3 Penny Stock Trading Blunders
Few penny stock traders think what happens to their orders after they click the order button. Every time you click the order button, you set in motion a complex series of event that are designed to fill your order quickly and efficiently.
Now, your stock broker is acting as an intermediary. What this means is that trade execution can vary from one broker to another.
1. Don't Try To Trade After Hours:
Stock market opens from 9:30 AM EST to 4:00 PM EST. These are the official trading hours where most of the institutional investors and the big players are active. What this means is that liquidity is high during those hours.
During the last decade, after hours trading and pre-market trading was introduced to extend the profit taking opportunities after the regular trading hours. However, during these after hour trading liquidity is low. So you should avoid trading during these hours.
2. Don't Use A Market Order On An Illiquid Penny Stock
You will find many penny stocks that have the potential to give explosive gains illiquid. What this means is that these stocks are not being traded in large numbers and the potential for a volatile price action is there.
When you want to trade an illiquid stock, never use a Market Order. A market order gets filled at the market price that maybe far away from what you had anticipated. Always trade an illiquid penny stock with a Limit Order.
3. Don't use FREE Data Sources
Avoid using free data sources like Yahoo Finance or MSN Money. They may be great to give you the stock quote at a fly but when it comes to serious trading always use the data feed provided by your broker.
As a trader, if you are investing thousands of dollars in your stocks than their is no harm in investing a few hundred dollars in a reliable data feed that might save you from the potential thousands of dollars lost in the future!
Article Source: FxTradingStock.com
About the Author
Mr. Ahmad Hassam has done Masters from Harvard University. Watch this weird 30 minutes Stock Trading video just now. Turn $200 into $100,000 in just 1 month with this FREE Penny Stock Trading Report that shows how to find killer penny stocks about to make a monster move in the market.
by: Ahmad Hassam
Total views: 21
Word Count: 347
Date: Tue, 19 Oct 2010
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