Normally when I trade stocks, I like to collect anywhere from $0.20 - $2.00/share. However when I engage in stocks where I try to profit $0.01-$0.05/share because of the massive volume I have at stake, I’m at a disadvantage.
Think about it, the stock is priced super low and the likelihood of it teetering a cent or two is lower than in other stocks. It often lives in fractions of a cent increments, which means that you’re compelled to place market orders in order to scalp a small, negligible profit.
Why even risk it? Market orders suck and they never get you in or out at a good price, so you’re playing a game that is stacked against you from the beginning.
It also leaves no room for technical analysis of any sort. The stocks I’ve been trading have been Direxion 3x Bullish or Bearish stocks and I can’t rely on the RSI or VWAP indicators I would normally rely on. Instead, in the case of SOXS and SOXL for Semiconductor stocks, I look to the movement of NVDA, the largest player in the sector, to see how it moves the stock. At that point, wouldn’t it be better to just trade NVDA where a small drop won’t hurt me as much as one with over 40x the volume size will?
Avoid these stocks unless the market is clearly on a bullish or bearish trend. If it’s a choppy market, you’ll be in a world of pain.