Volume traps

Sometimes an apparent bargain can turn out to be quicksand because of illiquidity. Before buying any stock, check to see how many shares trade each month and work out roughly the value of these shares.

You may find that the volume is very small and that even if you are showing a handsome paper profit, you cannot sell the shares when you want to and are consequently stuck in the stock. A stock with poor liquidity is a nightmare in a falling market, as sometimes there are no buyers at all, at any price!

You cannot eat share scrip.

NEXT ... Manipulation



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