How do I get rid of worthless penny stocks if there is no volume (so market/limit orders don't work) and my broker won't buy them from me?
Your broker should be able to answer this. Many brokers will buy it from you for the cost of a commission, if there's no legit buyer. "I dug up an old article on Motley Fool and one approach they mention is to get the stock certificates and then sell them to a friend: If the company was liquidated, you should receive a 1099-DIV form at    year's end showing a liquidating distribution. Treat this as if you   sold the stock for the amount of the distribution. The date of ""sale""   is the date that the distribution took place. Using your original cost   basis in the shares, you can now compute your loss. If the company hasn't actually been liquidated, you'll need to make   sure it's totally worthless before you claim a loss. If you have   worthless stock that's not worth the hassle of selling through your   broker, you can sell it to a friend (or cousin, aunt, or uncle) for   pennies. (However, you can't sell the stock to a spouse, siblings,   parents, grandparents, or lineal descendants.) Here's one way to do   it: Send the certificate to your stock-transfer agent. Explain that the shares have been sold, and ask to cancel the old shares and issue   a new certificate to the new owner. Some brokerages will offer you a quicker alternative, by buying all of your shares of the stock for a penny. They do it to help out   their customers; in addition, over time, some of the shares may   actually become worth more than the penny the brokers paid for them. By selling the shares, you have a closed transaction with the stock and can declare a tax loss. Meanwhile, your friend, relative, or   broker, for a pittance, has just bought a placemat or birdcage liner." Merrill charges $500 flat fee to (I assume purchase) my untraded or worthless security. In my case, it's an OTC stock whose management used for a microcap scam, which resulted in a class action lawsuit, etc. but the company is still listed on OTC and I'm stuck with 1000s of shares. (No idea about the court decision)
There is no one answer to this question, but there are some generalities. Most exchanges make a distinction between the passive and the aggressive sides of a trade.  The passive participant is the order that was resting on the market at the time of the trade.  It is an order that based on its price was not executable at the time, and therefore goes into the order book.  For example, I'm willing to sell 100 shares of a stock at $9.98 but nobody wants to buy that right now, so it remains as an open order on the exchange. Then somebody comes along and is willing to meet my price (I am glossing over lots of details here).  So they aggressively take out my order by either posting a market-buy, or specifically that they want to buy 100 shares at either $9.98, or at some higher price. Most exchanges will actually give me, as the passive (i.e. liquidity making) investor a small rebate, while the other person is charged a few fractions of a cent.  Google found NYSEArca details, and most other exchanges make their fees public as well.  As of this writing the generic price charged/credited: But they provide volume discounts, and many of the larger deals do fall into another tier of volume, which provides a different price structure. I would say it's a bit more complicated than that. Do you understand what a market maker does?  An ECN (electronic communication network) is a virtual exchange that works with market makers. Using a rebate structure that works by paying for orders adding liquidity and charges a fee for removing liquidity. So liquidity is created by encouraging what are essentially limit orders, orders that are outside of the current market price and therefore not immediately executable. These orders stay in the book and are filled when the price of the security moves and triggers them.  So direct answer is NYSE ARCA is where market makers do their jobs. These market makers can be floor traders or algorithmic. When you send an order through your brokerage, your broker has a number of options. Your order can be sent directly to an ECN/exchange like NYSE ARCA, sent to a market making firm like KCG Americas (formerly Knight Capital), or internalized. Internalization is when the broker uses an in house service to execute your trade. Brokerages must disclose what they do with orders. For example etrade's. https://content.etrade.com/etrade/powerpage/pdf/OrderRouting11AC6.pdf This is a good graphic showing what happens in general along with the names of some common liquidity providers. http://www.businessweek.com/articles/2012-12-20/how-your-buy-order-gets-filled That is mostly true, in most situations when there are more buy orders than sell orders (higher buy volume orders than sell volume orders), the price will generally move upwards and vice versa, when there are more sell orders than buy orders (higher sell volume orders than buy volume orders), the price will generally move downwards. Note that this does not always happen, but usually it does. You are also correct that for a trade to take place a buyer has to be matched with a seller (or the buy volume matched with the sell volume). But not all orders get executed as trades. Say there are 50 buy orders in the order book with a total volume of 100,000 shares and the highest buy order is currently at $10.00. On the other side there are only 10 sell orders in the order book with total volume of 10,000 shares and the lowest sell order is currently $10.05. At the moment there won't be a trade unless a new buyer or seller enters the market to match the opposing side, or an existing order gets amended upper or lower to match the opposing side. With more demand than supply in the order books what will be the most likely direction that this stock moves in? Most likely the price will move upwards. If a new buyer sees the price moving higher and then looks at the market depth, they would most likely place an order closer to the lowest sell order than the current highest buy order, say $10.01, to be first in line in case a market sell order is placed on the market. As new buy orders enter the market it drives the price higher and higher until the buy orders dry up. Because the HFT bought them in response to the guy buying. The HFT was only able to get them faster because his server and internet connection were faster. That in combination with the fact that they intentionally just spray the exchange with a huge combination of buys. If they don't have anyone on the hook, they just cancel.   So the HFT sends the exchange a bunch of buy orders. They know 99.9 won't match up with a guy who's looking to buy and cancel them. However, when they get a guy on the hook they let that one go through and don't cancel it.   A traditional market maker doesn't do that. They let all the orders go through and charge a higher price when someone wants it. However, this is accepted as fair because they're providing volume. They're making sure that buyers and sellers will have an active market. So it's expect that they should be able to profit for having that convenience.  When a HFT can cancel their orders at will they're not providing volume.  It's not uncommon for a market maker to buy as many shares as possible and then force you to pay more for it. However, they give people the ability to buy or sell shares.   HFT don't do this. They are fast enough to cancel buy orders unless they have a buyer on the hook. As a result they can be a market maker without any losses. That would be one thing, but they don't provide the market with liquidity. They just dump the shares as soon as they're done taking their haircut (tax). Its hard to write much in those comment boxes, so I'll just make an answer, although its really not a formal answer. Regarding commissions, it costs me $5 per trade, so that's actually $10 per trade ($5 to buy, $5 to sell).  An ETF like TNA ($58 per share currently) fluctuates $1 or $2 per day.  IXC is $40 per share and fluctuates nearly 50 cents per day (a little less).  So to make any decent money per trade would mean a share size of 50 shares TNA which means I need $2900 in cash (TNA is not marginable). If it goes up $1 and I sell, that's $10 for the broker and $40 for me.  I would consider this to be the minimum share size for TNA.  For IXC, 100 shares would cost me $4000 / 2 = $2000 since IXC is marginable.  If IXC goes up 50 cents, that's $10 for the broker and $40 for me.  IXC also pays a decent dividend.  TNA does not.  You'll notice the amount of cash needed to capture these gains is roughly the same. (Actually, to capture daily moves in IXC, you'll need a bit more than $2000 because it doesn't vary quite a full 50 cents each day). At first, I thought you were describing range trading or stock channeling, but those systems require stop losses when the range or channel is broken.  You're now talking about holding forever until you get 1 or 2 points of profit.  Therefore, I wouldn't trade stocks at all.  Stocks could go to zero, ETFs will not.  It seems to me you're looking for a way to generate small, consistent returns and you're not seeking to strike it rich in one trade.  Therefore, buying something that pays a dividend would be a good idea if you plan to hold forever while waiting for your 1 or 2 points. In your system you're also going to have to define when to get back in the trade.  If you buy IXC now at $40 and it goes to $41 and you sell, do you wait for it to come back to $40?  What if it never does?  Are you happy with having only made one trade for $40 profit in your lifetime?  What if it goes up to $45 and then dips to $42, do you buy at $42?  If so, what stops you from eventually buying at the tippy top?  Or even worse, what stops you from feeling even more confident at the top and buying bigger lots?  If it gets to $49, surely it will cover that last buck to $50, right? /sarc What if you bought IXC at $40 and it went down.  Now what?  Do you take up gardening as a hobby while waiting for IXC to come back?  Do you buy more at lower prices and average down?  Do you find other stocks to trade?  If so, how long until you run out of money and you start getting margin calls?  Then you'll be forced to sell at the bottom when you should be buying more. All these systems seem easy, but when you actually get in there and try to use them, you'll find they're not so easy.  Anything that is obvious, won't work anymore.  And even when you find something that is obvious and bet that it stops working, you'll be wrong then too.  The thing is, if you think of it, many others just like you also think of it... therefore it can't work because everyone can't make money in stocks just like everyone at the poker table can't make money.  If you can make 1% or 2% per day on your money, that's actually quite good and not too many people can do that.  Or maybe its better to say, if you can make 2% per trade, and not take a 50% loss per 10 trades, you're doing quite well. If you make $40 per trade profit while working with $2-3k and you do that 50 times per year (50 trades is not a lot in a year), you've doubled your money for the year.  Who does that on a consistent basis?  To expect that kind of performance is just unrealistic.  It much easier to earn $2k with $100k than it is to double $2k in a year.  In stocks, money flows TO those who have it and FROM those who don't. You have to plan for all possibilities, form a system then stick to it, and not take on too much risk or expect big (unrealistic) rewards. Daytrading You make 4 roundtrips in 5 days, that broker labels you a pattern daytrader.  Once you're labeled, its for life at that brokerage.  If you switch to a new broker, the new broker doesn't know your dealings with the old broker, therefore you'll have to establish a new pattern with the new broker in order to be labeled.  If the SEC were to ask, the broker would have to say 'yes' or 'no' concering if you established a pattern of daytrading at that brokerage. Suppose you make the 4 roundtrips and then you make a 5th that triggers the call.  The broker will call you up and say you either need to deposit enough to bring your account to $25k or you need to never make another daytrade at that firm... ever!  That's the only warning you'll ever get.  If you're in violation again, they lock your account to closing positions until you send in funds to bring the balance up to $25k.  All you need to do is have the money hit your account, you can take it right back out again.  Once your account has $25k, you're allowed to trade again.... even if you remove $15k of it that same day.  If you trigger the call again, you have to send the $15k back in, then take it back out. Having the label is not all bad... they give you 4x margin.  So with $25k, you can buy $100k of marginable stock.  I don't know... that could be a bad thing too.  You could get a margin call at the end of the day for owning $100k of stock when you're only allowed to own $50k overnight.  I believe that's a fed call and its a pretty big deal. "One practical application would be to protect yourself from a ""flash crash"" type scenario where a stock suddenly plunges down to a penny due to transient market glitches. If you had a stop-loss order that executed at a penny (for a non-penny stock) it would be probably be voided by the exchange, but you might not want to take that risk." The only time I've bothered with stop orders is when I think the position is in a particularly volatile state and there is an earnings report pending.  In this situation it's an easily debatable thing to do.  If I'm so concerned that the earnings report will be enough to cause a wild downswing that I'd place a stop order, maybe I should just drop the position now.   I subscribe to the school of thought that you don't sell your MVPs.  I've bought a few things on a whim that really performed well over the few years to follow.  To me it doesn't make sense to pick a return at which I would turn off the spigot.  So generally it doesn't make sense to hold orders that would force a sale, either after some upside or downside occurs. Additionally, if I've chosen something as a long term hold.  I never spend all my cash opening up a position.  I've frequently opened positions that subsequently experienced a decline, when that happens I buy more. Meaningless side thought: With the election coming I've been seriously considering pulling some of my gains off the table.  My big apprehension with doing that is that I have no near-term alternative use for the money.  So what's the point of selling a position I'm otherwise comfortable with just to pay taxes on the gain then probably buy back in? TD will only sell the stock for you if there's a buyer. There was a buyer, for at least one transaction of at least one stock at 96.66. But who said there were more? Obviously, the stocks later fell, i.e.: there were not that many buyers as there were sellers. What I'm saying is that once the stock passed/reached the limit, the order becomes an active order. But it doesn't become the only active order. It is added to the list, and to the bottom of that list. Obviously, in this case, there were not enough buyers to go through the whole list and get to your order, and since it was a limit order - it would only execute with the limit price you put. Once the price went down you got out of luck.  That said, there could of course be a possibility of a system failure. But given the story of the market behavior - it just looks like you miscalculated and lost on a bet.