Thinly traded stocks tend to go unnoticed by most investors because they are not as popular as other stocks. If a thinly traded stock suddenly catches the attention of investors, even a small increase in demand can trigger large increases in share price. For example, if a stock normally trades only 2, shares per day and a favorable article comes out in a financial journal, demand could soar to more than 10, shares per day.

This sudden demand could drive the price much higher over a period of days or weeks, resulting in large profits for those who held the stock before it became popular.

If someone sells a large percentage of shares in a thinly traded stock, the price is likely to go down because the supply of shares may exceed the demand from buyers. If you intend to accumulate additional shares of a thinly traded stock, you can watch for dips in the price and snatch up shares at a bargain. The same volatility that brought the stock price down can bring it back up, and you can profit from buying when shares are cheaper.

Typically, this buyer will offer a competitive price. Thinly traded stocks tend to be susceptible to desperation selling, so these companies may market your shares discreetly. Roger Ibbotson, professor of Finance at Yale School of Management, says thinly traded stocks do better in the long term than active stocks. He adds that thinly traded stocks need very few traders to move the price, and this means that a steadily increasing demand can help these stocks hold onto their gains.

More active stocks tend to get sold when they rise in price, while people who buy thinly traded stocks tend to hold them because they find few buyers on any given day. This tendency can put upward pressure on the stock over time. Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael.

He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business.

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What is thinly traded stock? Definition and meaning - idonayojujid.web.fc2.com

Bargain Prices During Dips If someone sells a large percentage of shares in a thinly traded stock, the price is likely to go down because the supply of shares may exceed the demand from buyers. Above-Average Long-Term Appreciation Roger Ibbotson, professor of Finance at Yale School of Management, says thinly traded stocks do better in the long term than active stocks. Opportunity in Thinly Traded Shares Seeking Alpha: Five Thinly Traded Stocks With Plenty of Upside The Trend Is Blue: Thinly Traded Markets Gold: Buying and Selling Thinly-Traded Stocks.

Thin Stocks Dominate Spotlight, Investors Beware Cherokee Bank: About the Author Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. Recommended Articles What Is Net Liquid Value in Stock? Can a Stock Price Fluctuate After Hours? Related Articles How to Find the Percent of Share Price to Net Asset Value ETF Vs. Stocks How do I Determine If a Company's Common Stock Still Has Value?

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