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Understand Liquidity for Better Penny Stock Investing
Essentially, liquidity is the term for the amount money flows through a stock each day. To get an idea of how liquid a company is, multiply the amount of shares by the price. Some stocks will trade hundreds of thousands of shares a day, while others may only trade a few hundred shares or none at all.
A stock that is very liquid has a lot of money flowing through it on a daily basis. Illiquid stocks tend to be very volatile. Investing only a few thousand dollars in an illiquid stock can drive the price up. It is also harder to sell such stocks since there are few immediate buyers.
An easy way to stay current is to subscribe to a free penny stock newsletter. The best way to invest in any stock is to understand the company’s history. In addition to the company itself, it is crucial to have a solid grip on current penny stock trends in the industry.
