All About Penny StocksUnderstanding Penny Stocks by Peter Leeds

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Selling Penny Stocks

Selling is almost entirely the same process as buying. You will need to know the same 6 points:

  1. The ticker symbol of the stock.
  2. The market which the stock is trading on.
  3. The number of shares you want to sell.
  4. Market or Limit price?
  5. Decide on the duration of your order.
  6. Know the total costs you would have to pay, including commissions.

Pretend that ABC exploded in price while you held 3,000 shares, and hit $2.95. You want to take your profits from 2,000 shares and let the remaining 1,000 ride. You would contact your broker online or by phone, with the following information:

Selling 2,000 shares of ABC (on AMEX) at $2.90, good through Friday the 11th.

One Scenario: Perhaps your first 1,000 would sell at $2.95. Then you still have 1,000 shares in your open order, and you see that the best bid is $2.75. You could either wait it out (your order is going to stay active until the end of trading on Friday, the 11th), or lower your asking price (see changing open orders).

You decide to drop your asking price to $2.75. In this case, the next 1,000 shares would almost certainly sell. You would get $2.75 per share for this second block of 1,000.

You have now brought in $2,950 from the first block of 1,000 shares, $2,750 from the next block, and you still hold 1,000 shares in your account. You will have the $5,700 deposited into your account, less the commissions your broker charges.

It is simple stuff, and once you have made one or two trades, you will realize how easy it really is!

In upcoming sections, I tell you about the brokers for penny stocks, how to monitor and change your trade orders on the fly, and how to pick penny stocks that are about to explode in price. So, let's get to it!