WDP-Acura TL

I'm buying penny stock on Scottrade and they are charging me a $7.00 commission rate plus 1/2% on principal. So that means whatver profit I make they are taking half of it? If so that is pretty high

doopstr

F penny stocks, they are cheap for a reason, because they are shit. If you are buying cheap stock you should be buying like 10-20,000 shares. Otherwise you will get raped by your broker and have no real profit.

iTimmy

Your an idiot. If you don't do your homework and make poor purchases you can lose a lot with OTC BB stocks. However if you play your cards right, even when the market is in turmoil you can make INSANE money. Sounds like you've been burned in the past, so it can't work for ANYONE else. That being said forget buying a stock at $0.00001 and having it shoot to $5.00, but the jump from $0.01 to $0.06 can happen in a matter of days. If you have a few million shares your talking some decent money in next to no time at all.

If I recall WDP-Acura TL only has $500 to invest, with only $500 very little is at stake and his only hope to have more money is to take some risks- and OTC BB stocks would be his best bet assuming he understands those risks.

The way Scottrade works with stocks under a dollar is like this. To keep things simple lets say you get 1000 shares for $100 dollars, that would make each share $0.10 when you buy it. To buy those 1000 shares would cost you a total of $7.50- $7 for the standard trade and an addition $0.50 to cover the 1/2% of the principal. Now said stock doubles(for sake of argument) and is now $0.20/share. If you sell it would cost you $8.00 for the $200 worth of stock- again $7 for the standard trade and 1/2% of the $200 dollars which is only a dollar.

moonraker

yea wdp i think you misunderstood...

its not 1/2 of your principal... its 1/2 a percentage point. as in .5 % instead of 50%. i do believe

doopstr

LOL, go ahead and buy it then. You'd have better luck at the casino with $500.

iTimmy

You may be right on that one!

KavexTrax

principal is the money you put in, nothing to do with the realized gains or profit you earn.
And yes one half percent is on principle, not fifty percent.

E.g. penny stock XYZ at .10 per share. You buy 1000 shares of it for:
1000(.10)+$7+.005(1000(.10))=100+$7+$ .50 = $107.50
So the fees are actually $7.50 for this example.