Stocks under $10 are usually considered hated stocks. They are hated, or rather, ignored by the large investment firms. Large investment firms have some very specific rules about what stocks they can invest in. One of the big rules for these firms is not to invest in stocks with purchase prices under $10.
Who cares, right? You should. When these large investment firms take a position in a stock, they are buying tens of thousands or even hundreds of thousands of shares. It can take several days for these firms to take their desired position and this can drive the price higher and higher*. A small, or broken company with a price of under $10 won’t typically move unless there is a catalyst of some kind**.
Try to buy stocks that are over $10 in price to take advantage of the upside that a purchase from a large buyer would deliver.
* Conversely, it is good to know that it can take several days for a large firm to liquidate a position when there is signs of trouble, allowing you to beat them out of the position.
** One way around this is for the company to do a reverse stock split. Watch out for these companies and most of the time, it is good to stay away.