Bid Ask Spread and the Danger With Trading Penny Stocks

This video is an explanation of what the spread between the bid and ask price of a stock. It's in response to a critique of Jon Lebed (http://lebed.biz) and his stock picking service where he tries to find low priced stocks, usually penny stock that he feels are undervalued and ready to take off. The problem is that many of these stocks don't trade very many shares, meaning they have very little liquidity, or in layman's terms: there's not enough stock being traded, not enough volume, for another trader to accept your buy or sell order. When you buy a stock with low liquidity it often has a big bid-ask spread, which means you may have a hard time selling the stock and getting your price. Video Rating: / 5