The next key
price then, to understand is the spread. The spread of this
situation is the difference between the asking price and the bid
price on the stock sale. In many cases, this number is a “built
in loss” when you are investing in the stock.
What is this built in loss? It is the fact that you have to
take into account the cost of your trade as well as other
factors. This would include such things as the transaction fee
as well as the fee that your broker will charge you.
If you have a stock that you are looking to sell, you will
want to at least break even when you sell that stock, right?
But, to do this, there are certain things that you will need to
take into consideration. To break even, you will need to insure
that all of these extra costs are figured into the price that
you sell for.
One thing that you will need to take into account is the fact
that you’ll need to know just how much you will need to ask to
get the right coverage to break even or do better in the sale of
a stock. It can be that the spread can be as much as fifty
percent to one hundred percent. In some cases, it will be over
that as well. More commonly, though, it is likely to be between
twenty five and thirty five percent. Nevertheless, this is a
cost to take into consideration.
Beware of any stock broker or other sales person that promises
you that you will get the same price that you paid. They are not
telling you the entire truth as far as price goes.
Are you confused by the two prices that are listed? Penny
stocks are commonly bid on using two price figures. There are
generally two bid prices listed and two ask prices listed. This
is called the inside, as well as the outside, bid and ask.
This is the range in which the stock can be bought or sold.
In most cases, you will want to consider the outside bid and ask
prices as well as the lower bid and the higher ask prices. These
are the numbers you are looking for as they are generally the
costs that you will find a public customer or beginner investor
is likely to need. Mark Up Pricing