3 Penny Stock Trading Blunders That You Should Avoid

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.
Two penny stock traders could execute same order but get filled at entirely different prices depending on the broker and the method used to get the shares that were requested.
What this means is that the stock broker that you choose can make a big deal in your trading.
Let's discuss some of the penny stock trading blunders that you should avoid: 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.
But the problem with this after hour and pre-market trading is that the liquidity is thin during these hours.
A small volume can make a lot of difference in the share price that you will get during these hours.
After hour trading can give you important indication on the direction of the day trades but the price maybe way off.
So, you need to avoid after hour and pre-market trading.
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.