Friday, February 08, 2019 11:26:43 AM
I researched it a little bit online on some forum posts on iHub and elsewhere and it could be someone who has a broker with a flat rate commission under 5k shares traded, and $0.01 per share over 5000.
For a penny stock purchasing a large amount of shares could make the commissions a lot more expensive than a flat rate on shares over multiple trades.
Some math:
Lets say broker commission of $6.95 per trade under 5,000 shares, and $0.01 per share if the shares are 5000 or more in the trade.
250,000 shares wanted.
If in trades under 5,000
250,000 / 4999 = approximately 50 trades
50 trades * $6.95 commission = $347.50 total commission for all 50 trades.
If purchased as a single block
250,000 * $0.01 = $2,500.00 total commission for the single trade.
Makes sense to me why that would be.
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