what are penny stocks in uk?

[jonboy123]

What makes you think you are ready to put real money into trading jonboy123? In EVERY thread you start you ask kindergarten questions about trading and yet you are risking real money. Go back to your XBOX360 jonboy123...before you go broke.

i think its pathetic when someone checks anothers thread history. ...for what?
i have put real money into trading, and i am at a profit.
i dont care if i go broke. At least im trying and learning. Im producing results.
Im asking kindergarten questions because im at that stage. You once were too. :clap:

 

[jonboy123]

There is no hard and fast rule. It would usually be a share with a price in single digits, AIM or Plus, highly risky, etc.etc. I am sure we can all guess what a penny share is.
I mean what would you call a share at 1p that effected a 100/1 consolidation? (not that it would take long for the share price to go down to 1p again.
Or how about Lloyds at 40p? Hardly what you would call a penny share.

lloyds at 40p are pennyshares / pennystocks......
based on what this thread has said......
eg...any share under 100p.
(yeah there are not hard and fast rules, diff people have said diff things)

with charts, do they show bid or offer? becasue what i paid...is just not reflected in the charts..... did i feel the wrath of the spread?

 

[raysor]

lloyds at 40p are pennyshares / pennystocks......
based on what this thread has said......
eg...any share under 100p.

Jonboy, you are getting silly now. You don't just read every answer and take it on board. I think most people know what a penny share is.
As I said before you have to think for yourself. If you read everything and believe it at face value you will never learn.
A lot of this is irrelevent anyway. What does it matter what the true definition of a penny share is? For penny share read-- the stocks that "aggressive" brokers recommend as a get rich quick thing (I.e. the broker get's rich quick), stocks that can be easily manipulated (read recent FSA regulation case history on Winterfloods FSA wins market abuse case against Winterflood), stocks that have little liquidity, few market makers, stocks that are easily placed to unsuspecting punters, etc.etc.
If you were placing £1m of crap stock what would you do; 100m at a penny or 2m at 50p??

 

[jonboy123]

Jonboy, you are getting silly now. You don't just read every answer and take it on board. I think most people know what a penny share is.
As I said before you have to think for yourself. If you read everything and believe it at face value you will never learn.
A lot of this is irrelevent anyway. What does it matter what the true definition of a penny share is? For penny share read-- the stocks that "aggressive" brokers recommend as a get rich quick thing (I.e. the broker get's rich quick), stocks that can be easily manipulated (read recent FSA regulation case history on Winterfloods FSA wins market abuse case against Winterflood), stocks that have little liquidity, few market makers, stocks that are easily placed to unsuspecting punters, etc.etc.
If you were placing £1m of crap stock what would you do; 100m at a penny or 2m at 50p??

sorry...yeah you make sense...i understand.
but lloyds at 40p are pennystocks. ....
im only asking cause ive read some traders concentrate solely on pennystocks and small cap companies for their trading.

i would say 2m at 50p sounds safer.
but thats just an extreme example..... pennystock is a loose term...doesnt necessarily mean literlly 1p...... thanks

 

[megamuel]

Jon,

Penny stock - Wikipedia, the free encyclopedia

"In the UK markets, a penny stock, or penny shares, as they are more commonly called, generally refer to a stock and shares in small cap companies, defined as being companies with a market capitalization of less than £100 million and/or a share price of less than £1 with a bid/offer spread greater than 10%. In the UK Penny Shares are covered by a standard regulatory risk warning issued by the Financial Services Authority(FSA)."

Just as Shadowninja said in his first post. Yes good returns CAN be made on penny shares, but they are penny shares for a reason, because they are not valued very highly. So they do not lend well to investing because there is more of a chance they will go bust, and they do not lend themselves well to day/ swing trading because they have a big spread generally. new_trader is a little harsh as usual but makes a very valid point. You seem to be struggling to grasp some of the basics so be very carefull with your trading at this early stage. I am sure you have made profit but unfortunately it is very very easy to make money trading, however its much easier to lose it.

Good luck,

Sam.

 

[jonboy123]

Jon,

Penny stock - Wikipedia, the free encyclopedia

"In the UK markets, a penny stock, or penny shares, as they are more commonly called, generally refer to a stock and shares in small cap companies, defined as being companies with a market capitalization of less than £100 million and/or a share price of less than £1 with a bid/offer spread greater than 10%. In the UK Penny Shares are covered by a standard regulatory risk warning issued by the Financial Services Authority(FSA)."

Just as Shadowninja said in his first post. Yes good returns CAN be made on penny shares, but they are penny shares for a reason, because they are not valued very highly. So they do not lend well to investing because there is more of a chance they will go bust, and they do not lend themselves well to day/ swing trading because they have a big spread generally. new_trader is a little harsh as usual but makes a very valid point. You seem to be struggling to grasp some of the basics so be very carefull with your trading at this early stage. I am sure you have made profit but unfortunately it is very very easy to make money trading, however its much easier to lose it.

Good luck,

Sam.

thanks.
"they do not lend themselves well to day/ swing trading because they have a big spread generally".... ive seen otherwise. Ive spoken to day traders who make moeny trading these, the liquid and volatile ones.

"Becasue they have a big spread, they are not good for short term trading....what do you mean? i undersand the spread is diff between bid and offer.....big spread = not good for short term trading as you will sell for much lower than bought...right?

Its weird, hoodless broker told me AIM cheap stocks were only good for long term investments like 3 to 5 years. And other people are saying they are no good long term. But yorue saying they are no good for day trading either.......

sorry to a pain....

 

[shadowninja]

You can make money on AIM but you have to really do your research and know the companies you're buying in to and then hold them for long enough so that they make big profits eg biotech on the verge of a break-through. Wide spreads do not make for good day trading irrespective of the product.

The problem with the current economic climate is that once high price shares now have penny share values so you have to bear that in mind when looking at penny shares. Rewind things 3 years and you'll get a better idea of what a penny share is.

 

[jonboy123]

You can make money on AIM but you have to really do your research and know the companies you're buying in to and then hold them for long enough so that they make big profits eg biotech on the verge of a break-through. Wide spreads do not make for good day trading irrespective of the product.

The problem with the current economic climate is that once high price shares now have penny share values so you have to bear that in mind when looking at penny shares. Rewind things 3 years and you'll get a better idea of what a penny share is.

right...yeah that makes sense....thanks.

why dont wide spreads make for good day trading? i thought scalping takes advantage of the diff between bid and offer......
do wide spreads make for good long term trades? what does it mean if a sprad is small or large? is one a good sign and one is a bad sign?

 

[shadowninja]

You're kidding, right? Think of when you go on holiday and you have to buy currency. You don't want a big spread do you?

The only caveat to looking for a service that offers small spreads is whether they will actually fill you at the quoted price. I've seen some SB companies offering tiny spreads but everyone says how **** their service is.

 

[jonboy123]

You're kidding, right? Think of when you go on holiday and you have to buy currency. You don't want a big spread do you?

The only caveat to looking for a service that offers small spreads is whether they will actually fill you at the quoted price. I've seen some SB companies offering tiny spreads but everyone says how **** their service is.

i thought scalping takes advantage of the diff between bid and offer......so bigger the spread the better.....no?
When i buy currency... i want more dollars for pounds. Whoever gives me more, i go with them. Thats just currency..... or is it spread? if its spread...i want the spread to be as big and wide as possible, in my favour.

 

[megamuel]

Nah man, you want a small spread. You want a small spread, I want a small spread, scalpers, swing traders, investors, everyone wants a small spread! For example, if a share price is 100p, because of the spread it could be 102p to buy it and 98p to sell it. So if you buy and sell straight away you lose 4p. You would prefer it if the spread were 99p-101p. Therefore if you buy and sell straight away you only lose 2p.... Scalpers want a smaller spread than anyone because they are buying and selling many times a day for lots of small profits, well thats what the want to be doing anyway. The longer you are holding for the less the spread matters, but it still matters, you still want a small spread. As I said in my PM, buy and read 'The Financial Spread Betting Handbook' by Malcolm Pryor... Or something similar. You really need to grasp the basic before you start risking too much. Best of luck,

Sam.

 

[jonboy123]

Nah man, you want a small spread. You want a small spread, I want a small spread, scalpers, swing traders, investors, everyone wants a small spread! For example, if a share price is 100p, because of the spread it could be 102p to buy it and 98p to sell it. So if you buy and sell straight away you lose 4p. You would prefer it if the spread were 99p-101p. Therefore if you buy and sell straight away you only lose 2p.... Scalpers want a smaller spread than anyone because they are buying and selling many times a day for lots of small profits, well thats what the want to be doing anyway. The longer you are holding for the less the spread matters, but it still matters, you still want a small spread. As I said in my PM, buy and read 'The Financial Spread Betting Handbook' by Malcolm Pryor... Or something similar. You really need to grasp the basic before you start risking too much. Best of luck,

Sam.

RIght, thankyou.

(from a book
$28.50 bid and $28.55 ask. This quote indicates
that if you wanted to buy, you would have to pay $28.55, but if you
wanted to sell, you would get only $28.50 for your XYZ stock. The
difference between these two prices is known as the spread. Traders
who trade liquidity risk often are referred to as scalpers or market
makers. They make their money off the spread."

so..... the bigger the spread.... the better... maybe im not undertading how they make money off the spread....(thats another topic about scalping then)

"Scalpers
are looking to make the difference between the bid and the ask,
which is known as the spread. If gold is $550 bid and $551 ask, a
scalper will be looking to buy at $550 and sell at $551. "

....But you cant simply BUY for less, and SELL for more straight away with shares.


NEXT POINT:
about buying shares for 15p when the charts now do NOT show 15p, just 10 or 11p as highs.
Im looking at candlesticks which JUST show opening and closing prices.... they dont show how high or low the price reached during the day.

cheerio.

 

[megamuel]

Jon, no traders make money off the spread. I don't know what book your getting that from. Scalpers buy and sell quickly for a few points. Rather than catch a big move they wait until something is moving strongly in one direction and they try and catch a few points on the end of that move. So they want something that is very liquid and has a SMALL spread. So no, when you say "The bigger the spread.... the better" you are wrong. I've already told you this once, why do you not accept the answer people keep giving you? I am right and you are wrong. Please try to accept that and not challenege it. As per your example, if gold is sell - $550 and buy - $551 if you buy and sell straight away you lose $1 per share, you can't just buy at $500 and sell at $501. You have to buy at the buy price and sell at the sell price, and the buy price is always more than the sell price at any one time.

Now for your 15p shares. What company did you buy shares in at 15p and on what day. If you can tell me that I can tell you if the reached 15p or not. What might have happened is that they have divided the spread and commission paid between your shares and give you an average share price. so your shares might have been 11p each but because of the spread and comission, the average price you might be paying per share is 15p. I'll be able to tell you if you tell me what share on what day.

Sam.

 

[jonboy123]

Jon, no traders make money off the spread. I don't know what book your getting that from. Scalpers buy and sell quickly for a few points. Rather than catch a big move they wait until something is moving strongly in one direction and they try and catch a few points on the end of that move. So they want something that is very liquid and has a SMALL spread. So no, when you say "The bigger the spread.... the better" you are wrong. I've already told you this once, why do you not accept the answer people keep giving you? I am right and you are wrong. Please try to accept that and not challenege it. As per your example, if gold is sell - $550 and buy - $551 if you buy and sell straight away you lose $1 per share, you can't just buy at $500 and sell at $501. You have to buy at the buy price and sell at the sell price, and the buy price is always more than the sell price at any one time.

Now for your 15p shares. What company did you buy shares in at 15p and on what day. If you can tell me that I can tell you if the reached 15p or not. What might have happened is that they have divided the spread and commission paid between your shares and give you an average share price. so your shares might have been 11p each but because of the spread and comission, the average price you might be paying per share is 15p. I'll be able to tell you if you tell me what share on what day.

Sam.

that info is directly from "way of the turtle", highly regarded book.
I do hear you, and i understand you, but from that info from the book, compared to what you are saying, there seems to be a conflict.
"you can't just buy at $500 and sell at $501. You have to buy at the buy price and sell at the sell price, and the buy price is always more than the sell price at any one time."
Thats what i thought. I do think you are talking sense.
the book may be expalining it in a diff way then...ill go back to it...but that quote is direct...

you expalined it well...thankyou.

15p shares.
XEL xcite energy
30/3/2009
10:11am
executed price 15p

thanks.

 

[jonboy123]

scalper from another thread said:

"Buying Bid - Selling ask spreads seems to work best for me"

 

[raysor]

that info is directly from "way of the turtle", highly regarded book.
I do hear you, and i understand you, but from that info from the book, compared to what you are saying, there seems to be a conflict.
"you can't just buy at $500 and sell at $501. You have to buy at the buy price and sell at the sell price, and the buy price is always more than the sell price at any one time."
Thats what i thought. I do think you are talking sense.
the book may be expalining it in a diff way then...ill go back to it...but that quote is direct...

you expalined it well...thankyou.

15p shares.
XEL xcite energy
30/3/2009
10:11am
executed price 15p

thanks.

How many did you buy. 4450?

 

[megamuel]

There you go. Price hit 15p exactly on the 30th. Red line is at 15p, circle on the 30th.

 

[jonboy123]

There you go. Price hit 15p exactly on the 30th. Red line is at 15p, circle on the 30th.

wow thankyou.... looks like i bought at exactly the wrong time......

nice chart....what software are you using?

 

[megamuel]

Sharescope Gold

 

[raysor]

wow thankyou.... looks like i bought at exactly the wrong time......

nice chart....what software are you using?

trades for 30th
Sorry not very clear. It shows trade of 4450 at 15 and the bid and offer was 14-16