Man Shoes - Stock Market

 The Two Ways to Buy and Sell Penny Stocks

There are two ways to sell a penny stock. You sell the penny stock either at the bid price or at any price above the bid, including, but not limited to, the offer, using a limit order. As is the case with both buying and selling, either you are initiating the action, or someone else is initiating a trade against you. By contrast, when you buy stock on the offer or sell stock at the bid, you are initiating action against another party, be it a market maker or another trader. The other party has already determined the price at which he wishes to make a trade (this can be referred to as a limit order or could be the actual bid or offer price as case with a market maker), and you are reacting, or initiating action against this price. When you buy a penny stock on the bid or any price under the offer or sell a penny stock on the offer or any price above the bid, another trader or market maker is electing to trade with you. You have already entered a limit order, and another party has come and "hit" your bid or "taken" your offer. The most important thing to remember is that when you initiate action, it is in anticipation of the stock continuing on the path of momentum on the side of the market on which you are trading. If you buy a penny stock on the offer, then it is in anticipation of price appreciation and vice versa on the sell side. Traders initiate in this manner when they open a trade or when they are forced to cover an existing position.