Ask Colin

Should I avoid thinly traded stocks and what daily volume would you regard as a minimum?

My rules are that a stock needs to trade almost every day and in sufficient volume for me to get in and out in one lot by hitting the bid or offer. You need to look at each case separately in the light of the size or order that you want to trade in.

Bear in mind that if a stock is thinly traded in an uptrend, it is likely to be even harder to get out of. If in doubt don't trade it and stay with the ones that have enough volume.

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