1. Penny stocks
A penny stock typically refers to the stock of a small company that trades for less than $5 per share. This type of stock normally has high price fluctuation, low liquidity, and facing a higher chance of quit the market. Normally we do not suggest public investors trade this kind of stock.
1.1 How to trade penny stocks in the United States?
Penny stock is a type of stock, and its trading process, trading hours, and order type are the same as those of common stock.
Warm reminder: Because of the high risk of trading penny stocks, customers need to confirm the risk disclosure before trading it for the first time. They may continue trading only after completion of confirmation.
1.2 If the share price falls below $5, can it be traded?
When the price of US stocks falls below $5, they are considered penny stocks. When customers open new positions in these US stocks, they need to confirm the risk, but there are no restrictions on closing positions.
1.3 What are the risks of penny stocks?
1.3.1 Due to their nature of high volatility, Penny stocks may experience high price fluctuation.
1.3.2 Penny stocks lack a liquid market with few buyers, perhaps even after their price has increased.
1.3.3 There is limited information available on the company's financial soundness or track record.
1.3.4 Penny stocks have a high probability of fraud and bankruptcy of the underlying company.
2. Microcap
Microcap refers to stocks with a market capitalization of US$300 million or less. These stocks are subject to high market volatility and significant compliance risks. Liquidity trading restrictions are now in effect.
2.1 Trading restrictions
Liquidity restrictions for trading microcap stocks are as follows:
• On each trading day, the aggregate trading volume for any single micro-cap stock across all clients at Futu (buy and sell orders combined) is limited to 10% of the stock's 30-day Average Daily Volume (ADV). Orders exceeding this limit will not be executed.
• On each trading day, the total trading volume for any single micro-cap stock per client (buy and sell orders combined) is limited to 5% of the stock's 30-day ADV. Orders exceeding this limit will not be executed.
• The above restrictions also apply to Algo orders.
• These parameters are subject to change. Please refer to the order page for the most current information.
