Penny Stock Volume

Penny Stock Volume

I would recommend that you spend your time trading penny stocks with decent volume. Personally, I choose penny stock that trade around 1,000,000 shares a day or more. I usually use average volume over the last quarter but at the very least I want to see that it has reached that level in the last 30 days. You can go to just about any finance website (Google, Yahoo, etc.) to get these numbers. I never trade anything with less than a 500,000 share average daily volume for the last 30 days. I would recommend you set a level that you are comfortable with and stick to it.

Why do I suggest this? You might think that on the surface 50,000 shares sounds like a lot of volume, however, it isn’t. As I slowly lay out my strategy before you, you will find that I never trade less than 1000 shares at a time. Depending on the size of your account you may hold 10,000 shares of a particular stock. If you wanted to liquidate your position in one day you would be trading 1/5 of the entire days trading volume. In a thinly traded stock that could put a lot of selling pressure on the price and make it difficult to get out at the price you wanted. Remember that the lighter the volume, the easier it is to manipulate the price of the stock. And I don’t want to be in a stock that can be potetially manipulated. See you soon.