Quick question!!!

[jayceebee]

Hello all. I'm new to penny stocks and I have a question that may seem ridiculously simple. Here's the scenario:

A company has 150 million shares available. The market opens with an ask of .03 and a bid of .02. I buy 2 million shares at the ask price of .03. I decide I want to sell at .04. Time passes and after 35 trades 50 million of the 150 million shares have been bought, leaving 100 million shares outstanding. Now the share price increases to an ask of .05 and a bid of .04. Someone decides they want to buy 2 million shares at .04 per share--the amount I want to sell my shares for. When they purchase the shares, do they buy mine or do they tap into the 100 outstanding shares? I apologize if this is a silly question, but I'm just trying to wrap my mind around the process.

Thank you,
James

[optradersc]

Hi James,

First of all, that market maker has to find a buyer, if there are no buyers then there's a good chance the bid will fall back to $0.03 or $0.02 before you can get out in time. And 2M shares is a lot, you will probably be selling out in lots of 5000, 10000, or 20000 shares. As to who gets to sell their 2M shares first, its a first come first serve basis. If your order clocks in at an earlier time, then you are first to sell. This is if you are selling at the market order. Limit orders will usually be last. Hope this helps.

[optradersc]

By the way, don't be like my brother, He used $27,000 to buy 100,000 shares of a stock at $0.27. He believes it will move to $1 and he can come out with $100,000 within a few months. This was back in August 2007. As of current those shares are at $0.18 for a loss of $9,000 and counting. I've always wondered why I didn't play safer trades like MSFT. MSFT would have netted him an extra $8,000 if he bought back in August and left it alone until now like what he is doing to the penny stock.

Heck, if he really wanted volatility, he could have into a trade in CF, MON, and MOS, or even taken solar stocks like SOFL, JASO, STP. Penny stocks give you the illusion that you can get rich quick, but more often than not people investing in these penny stock ignore the increased risk and volatility.

[Fredledingue]

I have invested twice into penny stocks: NNSR and CHPO.
I lost 85% on the first (and I'm lucky since that the company has stooped all operations), and lost 45% on the second (no news since June).

I don't think I'll buy more penny stocks ever.