1. Penny Stocks
A penny stock typically refers to shares of a small company that trade for less than $5 per share. These stocks usually have high price volatility, low liquidity, and a higher risk of delisting. Penny stocks are generally not suitable for most investors.
1.1 How do I trade penny stocks in the United States?
Penny stocks are traded just like regular stocks. The trading process, trading hours, and order types are all the same.
Note: As penny stocks carry high risk, you'll need to confirm a risk disclosure before trading them for the first time. You can continue trading after completing this confirmation.
1.2 Can I still trade a stock if its price falls below $5?
Yes. When a US stock's price falls below $5, it's classified as a penny stock. You'll need to confirm the risk disclosure when opening new positions, but there are no restrictions on closing existing positions.
1.3 Can I short sell penny stocks?
Yes, short selling penny stocks is generally allowed. However, for risk management purposes, Moomoo SG may adjust the short-selling limits and margin rates for certain penny stocks at any time.
1.4 What are the risks of penny stocks?
High volatility: Penny stocks can experience dramatic price swings.
Low liquidity: Penny stocks often lack buyers, making it difficult to sell even after the price increases.
Limited information: There's often little publicly available information about the company's financials or track record.
Higher fraud and bankruptcy risk: The companies behind penny stocks have a higher likelihood of fraud or going bankrupt.
2. Microcap Stocks
Microcap stocks are shares of companies with a market capitalization of $300 million or less. These stocks have high volatility and significant compliance risks. Liquidity trading restrictions are currently in effect.
2.1 What are the trading restrictions?
Liquidity restrictions for microcap stocks include:
Daily limit per stock (all clients): The total trading volume for any single microcap stock across all Moomoo SG clients (buys and sells combined) is limited to 10% of the stock's 30-day Average Daily Volume (ADV). Orders that exceed this limit won't be executed.
Daily limit per client: Your total trading volume for any single microcap stock per day (buys and sells combined) is limited to 5% of the stock's 30-day ADV. Orders that exceed this limit won't be executed.
Algo orders: These restrictions also apply to algo orders.
Note: These limits are subject to change. Please refer to the order page for the most current information.
