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Author: LonghornBoy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 253169  
Subject: Re: tiny titans Date: 10/13/2012 5:55 PM
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Well, the numbers don't really lie, do they?

The fundamental problem with screens like Tiny Titan is that the passing stocks typically suffer from low liquidity. In other words, given the combination of a low stock price and low average volume, it can be challenging to trade in and out of them without suffering from large price swings that will negatively impact your returns.

For example, American Realty Investors (ARL) was one of the stocks that passed this screen last week. On Friday, it closed at $3.41 and has an average daily volume of just 4,922 shares. This means that only about $16-$17k of this stock is traded on a daily basis.

Even if you were to buy into a small position of say, $2-$3k, it's likely that your trades would cause the price to rise a bit, simply because your buying a position that represents a substantial portion of that stock's daily trading activity. The same can be said on the sell side, too.

Due to this problem, a lot of the common screens we follow have liquidity filters in place to help mitigate this effect.
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