One of the most frequent 'get rick quick' thought that comes to mind for a person new to stock is to buy extremely cheap stocks (more commonly known as ultra penny stocks) and sell it for a 0.5cent gain.

For example, buying 200,000 shares that cost 0.5cents each for a total of $1000, and immediately selling for 1cent. Netting you a profit of 100%, or $1000. Sounds like the best thing since sliced bread!

But no, it doesn't work that way. In the stock market, there are some terms you have to be familiar with first. Terms such as bid price, ask price, queuing, market float.

Bid price is the highest price people are willing to pay for a stock. The term comes from the concept that you are 'bidding' for a stock. Ask price is the lowest price people are willing to sell the stock for. In the same line of thought, it is the price someone is 'asking' for a stock.

The stock market can really be described as a fruits market. That is, the transactions are done on a first come first served basis. In order for that to happen, a queuing system can be seen.

When you decide to buy a stock at 0.5cents for example, what happens is that you will join the end of the queue of buyers at 0.5cents. Only when all the buyers in front of you has gotten their purchases, will it be your turn for the purchase. Likewise, when you decide to sell a stock at 1cent, you will join the end of that queue of sellers.

Now, you might say that it sounds logical, and that it is still a good 'get-rich-quick' scheme. But there is this other thing about market float.

Market float, is simply the number of outstanding shares of a particular company available in the public market. To keep it short and general, the cheaper the stock, the higher likelihood that it has a large market float. What this means is that, there is a higher chance of there being a lot of people queuing to buy and sell at a particular price. For example, a 1cent stock could have 100,000,000 sellers at a certain price, and 75,000,000 buyers at another. Whereas a $4 stock could have 27,000 sellers and 45,000 buyers.

So if you did decide to pull off the 'get-rich-quick' scheme, you would have to line up at the end of the 75,000,000 buyers, get your purchase done, and queue to sell your stock at 0.5cent higher behind the 100,000,000 sellers. The likelihood of success? Very low.

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