How do you sell large volumes of penny stocks?
I'm new to investing and have done a few buy/sells online. I recently tried to unload almost 2mil shares of a penny stock (JNIP) with a limit order around the current market price trend (.0008). However the order is just sitting there unfulfilled. What's a good way to unload that sort of volume of a stock?
Additional Information:
Addendum to my initial question: Are you better off putting 2mil shares up for a single sale, or multiple sales of lesser amounts (like 4 sales of 500K)? Does it make a difference?
Answers
541 points
NYInvestor answered 8 months ago …
It all depends on the average volume of the stock and how many shares are outstanding. If you try to unload a million shares and the stock only trades 50,000 shares per day then you'll not only CRUSH the price but you'll find it near impossible to get all of your shares sold.
However, you'll still want to exercise discretion when when unwinding the position no matter how much you own. The less obvious you make it that you're unloading a big position the more likely it'll be that the stock will maintain its price.
102 points
zardiw answered 8 months ago …
For one thing, forget volume. Use dollars instead. Your 2M at 8 is only $1600. The previous poster was right in that it depends on the activity in the stock. If it only trades a few dollars a day, it will take some time to unload. Still using JNIP as an example, yesterday (4-6-09) it traded $174,000, so your $1600 is going to have little effect.
The reason you didn't fill at 8 is because there were about 5 market makers at 8, and the one your broker is routing through was one of the ones below the current mm at 8. Each MM has to be satisfied, i.e. sell what he has to sell before the next MM moves up. When your MM reaches the front of the line, then you will fill.
At any rate, before all the sells at 8 are filled, the ask will have to move to 9 and start getting buys there.
If a stock is moving up, or showing strength, put your sell at the ask and just wait. Traders will come up to get your shares. It's generally a bad idea to sell at the bid, because that will help drive it down, and you'll get less money of course.
If a stock is showing considerable weakness, you may be forced to sell at the bid, but a lot of times, it will fluctuate, and move back up.
A good practise is put your GTC sell in immediately after you buy a position. Sell 1/4 to 1/2 at a time as it's moving up. Once you have recouped your investment, you are sitting
..........z
102 points
zardiw answered 8 months ago …
contd: you are sitting on free shares.......takes a lot of stress out of the decision as to where to sell.......z
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