Penny stocks are a great vehicle for making out-sized returns on your investments.  But there are a lot of scammers in the marketplace trying to take your money.  You should never give in to them.  The most important way that you can do this is by placing limit orders, not market, when purchasing your stock.

A limit order is an order to purchase your given quantity of stock and at a precise price that you pick.  Your order will be filled when someone is willing to sell you stock at your price.  If there is no one willing to sell stock at your limit price then your order is not filled.

A market order is simply putting a request to the market to purchase your quantity of stock at whatever price the market is offering.  Your order will almost always be filled immediately.  Market orders fill immediately because you’re saying that you’ll buy the stocks for any price at all.  Since many penny stocks trade in relatively small volumes, the spread between the bid and ask (buyers and sellers) can grow to be quite large and you can end up buying a stock at a large premium to what you should be and therefore missing out on significant additional profits.

So never never never purchase using market orders for penny stocks.

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