Quote:
Originally Posted by The Fonz
I've never invested, and I've got a question to ask.
Ex: Stock XXX is worth $.10, so investing $1000 into this stock would buy me 10,000 shares. The next day stock XXX goes up to $.12, and I sell all 10,000 shares. This gives me $1200.
What sort of fees/taxes would I be paying on this? Surely it can't be that easy to make $200...otherwise people would just mess around with penny stocks and do this every few days. Right?
Help would be muchly appreciated!
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I'll give you how it would work on my etrade account.
You put $1,000 into said stock. cost $9.99.
You sell $1,200 of said stock. cost $9.99
You have $200.00
Minus $19.98
Remaining $180.02
You're going to pay taxes on $100.00
Lets say you pay 35% taxes.
$180.02
- $35.00
$145.02
You need the stock to increase 20% to make 14%
Now that's assuming you can get out. Lots of those stocks that trade a few cents each day have much more seasoned people playing them. So their are already a ton of bids and ask on each side. You'll line up to get your shares.. maybe get them at $00.10. But usually there is a ton of asks at $00.105, $00.11, $00.115, $00.12. They'll all get their fill before you do.
Then the selling pressure will drive it back down.. repeat. While you're still wondering when can I get rid of my shares.
Chances are you'll wait a long time.
Then you'll start to get the hang of it. See another one that looks a bit better, decide to get out of this one for the other one. Take a small loss. Now you're going to need 10% just to break even and 27% to get that original 20% you were looking for.
Repeat!
It can work.. I had a little company that paid my yearly insurance a few times. I had that money to play with through a tip by someone who knew a heck of a lot more than 90% of the people in Calgary about O&G. And in the end.. I probably am even...
Although it's a really good learning lesson!!
Good luck!
** my numbers may be completely off as I just am rambling away.