Rule of thumb for Volume?

byronio said: "I liked the setup for DMOI last night, and so far today it's up like 18% or something. My question is, if I had gotten in, would I have been able to get out? The shares I would have gotten with the money I have would have represented a third of today's total action. I don't want to learn the hard way with my money, but is there a rule of thumb for daily volume average versus total number of shares outstanding that I can follow so that I don't buy a stock that I can't get out of? How common is it that it actually happens that you simply can't get out because of lack of liquidity? Obviously a volume of a million doesn't mean much when it's a $.003 per share stock."

HappyHarry said: "I don't have any set in stone rule for you, but stocks with less that 200,000 daily average might be tough to dump in a hurry."

LanceJ said: "[QUOTE=byronio]I don't want to learn the hard way with my money, but is there a rule of thumb for daily volume average versus total number of shares outstanding that I can follow so that I don't buy a stock that I can't get out of?[/QUOTE] Sure. I posted a spread sheet for download that allows you to calculate the "liquidity ratio" of a stock. Do a Search for all posts from me and you'll find it."

byronio said: "[QUOTE=HappyHarry]I don't have any set in stone rule for you, but stocks with less that 200,000 daily average might be tough to dump in a hurry.[/QUOTE] Thanks. Does it matter what the price is? A 3 cent stock with a volume of 200,000 might still mean only 5 guys own it all, right? And, 50X50 means you are guaranteed to be able to get out of at least 5,000 shares, right? I know there is no guarantee that you can get out at the price you want, especially if you wait for it to drop before trying to get out, but is the bid/ask size a dependable thing?"

HappyHarry said: "It's not always a dependable thing. Here's the post about [url=http://www.superiorinvestor.net/thread724.html]liquidity ratios[/url] There should be someone making a market in most stocks."

byronio said: "Thanks to both of you."