$100 minimum order?

Posted by Fukushu on August 17, 2008 (08:58PM)

 Since when has there been a $100 minimum order in effect? I started an account with tradeking becuase it was not only supposed to be a pretty good place to buy stocks through online, but it was also supposed to be on of the least expensive ways to go.... how is imposing a $100 minimum order keeping this a low cost option? I realize it may not be much to some but to a beginning investor who has only $300 to get started with that is a big chunk of funds to have to dump in one place. Im afraid having to call the 877 number for some stocks is going to become an inconvenience as well.

 I just tried purchasing 50 shares of a stock with a good till cancel limit of .36 (current bid is .35) and received an error message telling me "for your security, certian symbols may only be traded with a broker. Please call us at 877-495-5464 to place this order". I then tried to put in a good till and a day order for some shares of another stock with a limit set at .47 and the message I received was "Due to the additional cost of mantinence on pink sheets and otc-bb securities, we require a minimum purchase of $100 for each trade"  .... since when? on 8/15 I placed an order for a total of $90.45.

 I tried checking the news section on the site to see if there was any info on this sudden $100 requirement for trades but couldnt find anything. Anyone know what is going on with this? If I am going to be required to do minimum order amounts I may have to start up an account with another online company that will allow me to continue to do smaller order amounts.

Nopho_thumb Brokerage Account

Posted by SF on August 17, 2008 (09:48PM)

I can't speak for how long the rule has been in effect but I know it has been there since I came on here which is at least a few months and I suspect longer. TK lists it on the commissions and fees page that all OTCBB and PK orders need to be a $100 minimum order. Whatever order you placed on 8/15, and I am only guessing here, wasn't actually OTCBB/PK.

The rule about having to call to buy some (penny) stocks has been gone over a few times in the forums so I'm sure a search could you lead you to a better answer than I could give.

Anyways, good luck.

Posted by Chris L on August 18, 2008 (07:58AM)

Hey Fukushu...

We have always had a $100 minimum order amount for OTCBB and Pink Sheet stocks. Your order on 8/15/08 was executed online, although below $100, because it was not for an OTCBB or Pink Sheet security. We require the $100 minimum due to the increasing costs for us to trade these securities. One of the increased costs brokers have is the need to monitor market manipulation, which is more prevalent with these lower priced, lower volume securities. This is also why we require some orders to be only placed only over the phone. Anytime you place an order on a security that costs less than $2 per share (although there are no specific rules) you may be required to have a minimum order amount and to phone in your order. The best thing to do is try your order online first, and if you are rejected, please call us right away. If you have any further questions, please contact us directly at 877-495-5464 or through Live Chat.

Chris Lebhar
TradeKing Customer Service Representative

Posted by ISUEU on August 18, 2008 (03:52PM)

Even with TK low commission structure, you would have to hit the cover off the ball to make it worth your while. Your money is better spent on some lotttery tickets and maybe a cup of coffee for some homeless guy if you want to be charitable?

Posted by Fukushu on August 18, 2008 (04:54PM)

Thank you kindly for the clarification guys. I am still new to all this, just opened my account last week and other than playing around on virtual stock exchange off and on for the past few years I have very little experience in stocks.

 I have heard a lot of good and bad about trading in "penny stocks", VSE does not let you get those stocks so I was never able to practice with them unfortunately. I wasnt looking to purchase the .36 stock for buy/sell short term gains, the purchase will be for more of a long term investment. The company is an established company that deals in a market that is seeing increasing consumer interest everyday as the concern for energy conservation continues to rise.

 I am only starting out with $300 which is why I am targeting lower priced stocks and so far all my purchases ... the whole 3 so far  ;) ... have been made with long term gains in mind, I just dont have the time or money for the usual activity penny stocks seem to get of buy a ton of shares on a low swing and turn around and sell them ASAP on a high swing.

Thank you again guys, any help, clarification, and even constructive critisism is always appreciated while I get a handle on all this  =)

Posted by corbinb2 on August 19, 2008 (03:19AM)

Just my opinion, but while it may seem worthwhile to snatch a boatload of stock at 36 cents a share, you probably would be better off dealing with stocks over $2 a share. Far fewer restrictions in that area and above. The other thing to keep in mind is that just because you have money to trade with, doesn't mean you have to. My point is, you could quietly sock away away $10, $20, $50 or however many dollars away every so often and build your base capital to something you can do some 'damage' with. (damage = tearing it up!)

 

Just my opinion and good luck with your venture into the world of investing. (Don't forget to do your own research!)

Posted by Lazy Trader on August 20, 2008 (09:50AM)

As ISUEU pointed out, investing such small amounts will have fees kill your returns. Do you realize that if you invest $100 your stock has to rise 9.9% for you just to break even? That's $4.95 to buy, and another $4.95 to sell.

I agree with Corbinb2. Unless you're selling covered calls, I don't think it matters how many shares you're buying. 300 shares of a stock trading for $0.33 is the same as 3 shares of a stock trading at $33. And the stock trading at $33 is probably a lot safer.

You're probably better off investing in a low cost index fund until you have enough for individual stocks. A general rule of thumb is to try to limit your commission expenses to under 2% of your investment.

Good luck with your investing.

Posted by sandirose2 on August 20, 2008 (06:54PM)

Have you thought about options? You can trade a higher stock for a smaller amount.  You might be able to get a more stable equity to trade at a fraction of the cost. I started trading options because I had a smaller account and I find that Your percentage of gain is a lot better. example a $20.00 stock may only cost you approx. 2.00 depending on how far out you want to go and how much you want your delta to be. Do some virtual trading to get the feel of it first.

Posted by Fukushu on August 21, 2008 (05:15AM)

Thank you for all the feedback so far. As I have been looking at stocks I have started looking into what the stocks price "target" is. I was wondering how reliable target prices are on stocks? For example one of my stocks ICXT has a 1year target of $10.

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