Problems with shares under 1p

Freetrade user #110,720

Hey,

I was wondering if anyone could help me as I’ve experienced a problem with one of the stocks I invested in.

At the moment, Sound Energy PLC (SOU) is fluctuating between 0.98p and 1.13p. I purchased the share at 0.98 and tried to sell at 1.13p, but when I tried to sell at that exact moment (whilst checking the live price on Google), it sold 12531 shares for £122.80 even though I bought them for £135.04 (Purchased as £123.54 then a further £11.50).

After selling lower than I bought for, I tried to then buy the shares back for 0.98 once the price had dropped again (as the pattern/nature of this stock fluctuates every 5 to 10 minutes and keeps revolving between 0.98 and 1.13 - I’m not sure why). However, when I tried to buy again at the cheaper price, I was charged 1.13 again and only for 10961 shares.

I thought maybe (possibly) I was very unlucky with my timing on both occasions, so to test this out, I kept an eye on the live price again on Google and timed it just exactly as it changed back to 1.13 then sold again to try and get my money back, but then I came out with just £107.42 even though I had purchased the shares with £122.80. (Around a £15 loss!)

I did one last try because it didn’t seem right so topped up with £30 and purchased one last time (exactly as it dropped again to 0.98 to bring my share amount back to where it was at the beginning at over 12,000 shares), but AGAIN it charged me the higher rate of 1.13 and subsequently, the £30 is now also gone. I decided to just sell the whole lot again and invest in another share instead because I’m furious!

I don’t know what to do about it because I’ve lost £45 in the space of about 30 minutes and not because of bad investing, but because of the app not working properly with this particular share (I haven’t had any issues with any other shares). I was thinking that the issue might be that the app can’t calculate it accurately because it is under 1 pence.

I would like to know if anyone has any advice for me on how I can get my £45 back.

Help!

Carly

The problem is that live price is not THE price. It is the average of the transacted trades and so you cannot always actually buy or sell stocks for that price.

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I’ve not looked into it much, but could it have anything to do with stamp duty? 0.5% of a purchase might not sound a lot when it only comes to a couple of pence but soon adds up when each share is less than a penny.

Sound Energy is listed on the AIM and so you are not charged Stamp Duty.

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That’s all my ideas gone

You also have to take into consideration that you’re trying to trade a pennystock. It’s volatility is very very high. Prices change very strongly with most trades made (illiquidity). As a beginner you should definitely not try to trade stocks like this one.

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The bid/ask spread is eating you up. Don’t make trades like this.

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  1. How did you check prices? I would suggest using google finance. Even yahoo looks delayed to me
  2. Have you checked execution prices at LSE? were they inline with other trades executed at similar time? if stock doesn’t have good liquidity, this may be issue

Thank you for your replies - I guess I’ve learned my lesson here! As a new trader I jumped head first into buying penny stocks at volume!

These look to be your trades.

Your problem will be that the share price quoted is essentially the largest last filled order price. As a buy order was filled you saw 1.13 then a sell order came through and it dropped to 0.98 but that does not mean you can transact at 0.98.

Does that make sense?

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penny stocks are close to gamble in my view

and I don’t think Freetrade wants to be a place for penny traders

alas for new investors we are very easily to be attracted to penny stocks because they are sexy and exciting

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Thanks, yes it makes sense now. I didn’t quite understand how it worked before.

Happy to help. It is maddening to think you have got the pattern and then keep getting stiffed. In future, now that trades are free maybe, maybe dip your toe in with a small lot to test how wide off the mark prices are.

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Definitely! I think it’s tempting to go all in, knowing that the share prices are so low because of the current economic climate and fear of missing out, but I totally agree!

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I’ve already sold it all - Might be tempted to buy into Sound Energy again if they come any closer to sealing their oil deal with Morocco. Keeping one eye open.

I think this is an example of where having an Order Confirmation Screen would be helpful.

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Another persons post about the same thing again, time to be telling people a confirmed price. I saw someone comment that its in the pipeline. Any news on this?

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I totally agree!

Carly, Han seems right hear. the price quoted as “the price” is just the mid price between the bid & offer (buy and sell), the buy and sell price is always different. Check the bid/offer prices as this will give you the actual price to buy sell at. Good luck

Hey all, I’ve taken everyone’s advice on board and today I’m £70 up from when I posted this post by investing more carefully. As a new trader it’s easy to trip up fast by not understanding the market properly. Thanks for your support!

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