It is highly recommended to always use limit orders when placing an order for penny stocks. This not so much a strategy but rather an important trading rule you should never violate. A limit order is an order to buy or sell a security in which you specify the price you want the transaction completed at.
By placing a limit order you protect yourself. You want this protection in a situation in which you placed an order for shares of a penny stock. Using the example of not using a limit order, let's say you place a order for 10,000 shares of a stock that was trading at.50 when you called the order in. But by the time the order has been processed the stock, Market Makers could have bid up the price to.75. The order will still be processed for the 10,000 shares and you will owe $2,500 because they sold you the shares at.25 more than you wanted to buy them at. They will charge you interest on the money they had to extend to cover your purchase and liquidate your holding within a week if you do not send them a check for the amount they loaned your account.
Always use limit orders so you are protected from price swings. This is even more important when you are placing an order for a hot penny stock or a stock with little or no volume. Market makers have time to study your order and play with the price so they can see how high you are willing to buy or how low you are willing to sell. If you place a market order the market maker can take the liberty of moving the price to the point where he can make the most money off you. Don't let this happen to you.
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