Virtual Trading Penny Stocks – Does it Reflect “Real” Trading?
I have been on www.howthemarketworks.com for about 3 weeks now. I started with $15,000 in virtual money and am randomly choosing stocks between $0.01-$0.05. I have seen incredible returns….almost 100% in two weeks. I check the account each day when the market closes and sell off anything that made money.
How close would this simulation parallel trading with real money? My thinking is that it would not be too accurate. Everytime that I purchase a new stock to replace the one I sold, I buy $5000 worth. This generally amounts to over 100,000 shares which seems like it would have a significant impact on the stock price in the real world. If anyone could offer some guidance I would greatly appreciate it.
I think you hit the nail on the head, look at the volume of most penny stocks, you will see something that usually trades under 1million shares a day. (look at yahoo finance to see) If you buy or sell a huge amount of stock you can make the stock price swing out of control.
I would be willing to bet you will have a hard time finding a reputable broker that will deal in significant amounts of penny stocks. When I traded on td ameritrade ( a couple of yrs ago) they would ding you with a penny a share for penny shares for each buy and sell.
Lastly, much of the information on penny stocks is slow to market. Some stocks are quoting prices hours or days old.
So you problems are:
1)manipulating your own market
2)finding a broker that will even deal with them
3)paying a huge price for commissions
4)quotes may not be reliable
5)THERE IS A REASON THESE COMPANIES ARE NOT TRADING ON THE “BIG BOARDS”
Buy quality hold long. Good luck trading.
Trading Penny Stocks The Good, The Bad and The Ugly of Trading Penny Stocks