Home > The Stock Market > PLAYING TODAY’S STOCK MARKET TIP #5: TRADE SHARES IN ANY QUANTITY YOU LIKE!

PLAYING TODAY’S STOCK MARKET TIP #5: TRADE SHARES IN ANY QUANTITY YOU LIKE!

October 23rd, 2011

TRADE SHARES IN ANY QUANTITY YOU LIKE: If you’re buying and selling shares of actively traded stocks (like the ones that are recommended in the “Wall Street Craps” approach), you don’t have to be concerned about whether it is for 100 shares (round lot) or 47 shares (odd lot).

While there are certain limitations to buying odd lots (i.e., parcels of stocks that aren’t multiples of 100), it doesn’t affect the simple buying and selling of actively traded stocks that are listed on the major American stock exchanges. There was a time, in the past, when trading in odd lots would cost the average investor an additional one-eighth to one-quarter point. That was because the transaction was physically handled by an “odd lot broker,” who trekked over to the trading floor for that particular stock to find a buyer. But today, small stock trades, whether for 35 or 100 shares, are handled by computers rather than by people. That means you can buy shares in any quantity, without incurring any extra costs.

But for many people like me, the preferred way to buy stocks is in traditional round lots. Perhaps this is out of habit or because it feels like a simpler and cleaner way to keep track of my trading positions. On the other hand, I prefer to buy positions in regular mutual funds based on round dollar amounts and fractional shares. The point is that you are free to choose how you want to trade stocks and mutual funds in whatever share quantity or dollar amount that suits your tastes, without any regard for cost or quality of execution.

**********

“If you have never missed when investing, you haven’t been in there trying.”

Venita Van Caspel

Be Sociable, Share!
Categories: The Stock Market Tags:
Comments are closed.