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Stock with low volume(2000-4000) Per Day? Is this a bad sign? |
The company I invested into ($1500) has yearly revenue of about 10 million dollars. However, when I bought my 1300 shares I didn't know what volume meant! So after the stock market closed I looked at the stock I bought. I looked at the volume. It was 1300! I put two and two together and realized I might have made a very poor investment! About 6 days ago it was trading for $1.80 and I bought it at $1.15 and right now it is $1.10. Low volume does not mean poor investment. Just means its not on people radar. There are alot of things to take into consideration like how many shares or outstading or in the float. If there are very few shares then it will not take alot to move the stock up or down. A stock could go up or down 20% on as few as 100 shares traded depending on the size of the float. Also what does the chart look like? Has it been flat for 2 years or is there alot of movement? Low volume means it is not liquid. It will hard to sell, because few people wants to buy it. Low volume doesn't mean bad investment. Maybe its just a good company, but many people doesn't aware of it. For more information check stockpickguide.com Congrats! Thin market makes it risky from the point of view that it doesn't take much to move the price and you are vulnerable to someone with 1300 shares dumping them all at once for whatever they can get for them. There are some good cheap stocks out there and you can find them with a simple stock screening routine just by setting the criteria for price under, say, $10, and the volume, say, over 25000/day. Know who will show up? Try the symbol F. Price under $9 and yesterdays volume over 90 million. And you know the company, too. So, if your budget doesn't allow for the high priced stocks, there is still some good stuff for cheap. Penny stock is very risky - any stock under $5/share is not for the amateur investor - sell now before it goes any lower and put the money in mutual funds or CD's - much safer |
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