Would it be possible to Scalp of Penny Stocks such as PCI or other likewise stocks. I know you actually can do it, but from a Commission and tax perspective would it be wise? If some one was inclined to do so. I have no real intention to do such a thing but, its really just a hypothetical Question really.
In my experience with the London Stock Exchange you would get hammered. Whenever I have placed a offer for a share, it does not appear on the spread.
Example: let's say the spread is 9.0p - 9.2p so I place a order at 9.1p. In Canada, my order would appear instantly and someone could snap it up. However, my experience in London is that the trade wont get executed until the bid exceeds my offer price. Same for sells... So you are effectively buying and selling at the wrong end of bid and ask.
Now this is only my experience with the LSE (not just PCI) and I trade with TD Waterhouse, and others may have different experiences.
Add Stamp Duty, Commission and the hassle of organising your tax returns and I v much doubt it is worthwhile.
BUT the biggest negative from my perspective is being able to actually profit from it in terms of timing and discipline etc. A bad trade could send you into a panic.... This is why I am a buy and hold investor!
You need to be buying vast amounts of shares to make money of small movements in the price and then to cover commsions taxes etc. Also the stock needs to be highly liquid to get out of a position. Try scalping on spread bets for a while, put a euro bet down and see how you get on. Not that easy. Also dont forget reasearch on prices charts etc. Some of the us sub pennys you can buy a few million shares for a thousand dollars or so and they can make movements in a day that could double money but few and far between and they dont call them pump and dumps for nothing