As a beginner, we recommend that you don’t trade more than three penny stocks at one time. You need time to do your homework on the stocks you own, as well as to research stocks you may be interested in buying next. Too many stocks will limit your ability and reduce your chance for success.
Buying and Selling
To acquire shares in a company, you give your broker a buy order. To complete the transaction, your broker needs the following information:
- Stock Ticker symbol (HIRU, RMDM, etc.)
- Name of market the stock trades on (OTCBB, Pink Sheets, etc.)
- Number of shares you want to buy (volume)
- The bid price, or price you want to pay for the shares. A market order means you will pay the best available price at the time. A limit order means you will specify a price that you want to pay. Using a limit order increases your control over the transaction.
- The order duration. You may keep your order valid for just one trading day, or have it valid every trading day until it expires on the date you specified.
To sell shares in a company, you give broker the same information, including the asking price, or the price at which you want to sell. The trade occurs when a bid and the asking price meet.
Several buy and sell orders normally appear for a given stock for different amounts, while the stock quote only shows the highest bid price and the lowest ask price.
'Best Price Priority' Practice
Your broker fills the buy orders at a higher price and the sell orders at a lower price first. For orders to buy or sell stock at the same price, the broker fills the orders in the order in which they were received.
