Today, you’ll learn what is the maximum number of shares you can buy to manage risk.
In fact, you can trade low volume stocks to profit in every opportunity.
If you ask this question, you probably work in a large institution or trade in penny stocks. Might you have wondered about the answer to this question?
The maximum number of shares you can buy is about 10% of the average volume traded of a stock.
For example, if the average volume traded in the last 20 days is 100,000, you want to buy only 10,000 max.
Also, it will allow you to get out if the trade is against you.
The real question should be, how should I divide my capital and how many stocks to buy.
In this maximum shares you can buy, you have to account for the average volume in the last 20 days to get the base.
The idea is probably new to you. If you haven’t heard of it, try to backtest it and let me know the results.
This guide can open the door for more opportunities in stock trading.
You can now buy and sell stocks even with low volume. You were probably taught to trade only highly liquid stocks.
If that’s the case, then you are missing a lot of opportunities.
Smart traders stay away from the big guys who use computers for high-frequency trading.
Can you beat them?
When trading low volume stocks, you should set your maximum shares to go in and out of your positions fast.
How many stocks can you buy in a day?
One may ask, is there a limit on how many shares you can buy.
The number of stocks you can buy is unlimited as long as you can afford it.
But are you going to do it even if you are the richest guy in the world?
Of course not!
You might end up buying the whole market even if you’re risking only 2% of your account.
In the maximum amount of shares you can buy, you have to consider the average trade volume to trade stocks correctly.
It’s the reason most beginners should learn the tricks below to avoid any losses.
Retail traders should learn the strategy below to protect your capital.
For example, I trade low volume stocks in the market to avoid high-frequency traders.
You might have thought I don’t trade higher volume, but I do. However, I use different strategies to follow the trend.
Can you buy as many stocks as you want? You can buy as much as you want as long as there are sellers. The sellers will list their prices, including the total volume. The aggregate volume is the number of shares that buyers can acquire limited to their available capital.
Buying One Share Only?
Buying one share of a stock is worth it as long as you do it for long-term trading.
If you buy and hold it for a long time, it can pay off.
However, if you actively trade it, the commissions will cut a big chunk in your profits.
How Many Shares are Available To Buy?
The available shares to buy is often available at the Ask/Offer in the trading terminal during trading hours.
The offer prices are the best prices that sellers are willing to sell the stock, including the number of shares.
The total number of shares will be available for buyers.
You can buy any number of shares of the stock as long as there are sellers.
However, for illiquid stocks, all sellers may offer only 5,000 shares or lower.
That’s the maximum amount you can buy.
For example, some stocks have created high demand, which leads to a temporary loss of supply.
Whenever it happens, buyers have no choice but to take only the available shares.
Thus, they are limited to some shares they can buy.
How many shares of a company can you buy? Theoretically, the total outstanding shares are also the limit you can buy. However, the shares of the directors are often held for a longer period or lifetime. Thus, it can limit your buying of stocks.
Tips for beginners
- Divide your capital by 10.
- Find a trading strategy with an edge.
- Select ten stocks to buy.
For example, for $100,000 capital, use only $10,000 per trade of up to ten stocks.
Then divide 10,000 by the current price of the stock to get the number of shares to buy.
The table does not take into account trading and commission fees.
In these maximum shares, you can buy enough of a stock to get out fast when something wrong happens.
You can divide your capital by ten to diversify your risks.
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