The Real Risks of Trading Low Volume Stocks on Bursa Malaysia
•By Maher Saham
Artikel ini juga tersedia dalam Bahasa Melayu
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Many new investors love hunting for cheap stocks — those priced at just a few sen — because they seem to have "explosive potential". But behind that seemingly affordable price, low volume stocks actually come with significant risks that many are unaware of. Let us break them down one by one.
This is the biggest risk. When a stock''s daily volume is too low (for example, less than 50,000 units per day), it means not many people are buying or selling. So if you want to buy or sell a large quantity, the price movement can become unreasonable.
Example on Bursa Malaysia:
Stocks like XOX Bhd or DGB Asia Bhd sometimes appear active for a week, then suddenly go quiet for several days. If you try to sell 200,000 units at once, the price could drop 10-15% because there are no buyers at the price you want.
The real meaning:
Even though your profit looks great on paper, you may not be able to "realise" that profit because nobody wants to buy from you.
Say you successfully buy a cheap stock at RM0.05 and the price rises to RM0.08. On paper, you''ve made a 60% profit. But when you try to sell, only 20,000 units get bought. The remaining 180,000 units are stuck. To sell quickly, you have to queue at an even lower price.
Think of it this way — you buy a house in a remote area. When you want to sell it back, it''s not impossible — but finding a buyer is very difficult.
Low volume stocks are very easy to manipulate by "market makers" or certain parties. When there is a small amount of large buying, the price can skyrocket without any fundamental reason. Similarly, when they start selling, the price can drop sharply.
Example in Malaysia:
Sometimes we see stocks that have been quiet for a long time suddenly surge 40% in a single day, without any company announcement. That is usually a sign that the price is being "manipulated".
Important tip:
If you still want to buy these types of stocks, use a limit order, not a market order. Set the maximum price you are willing to pay yourself, rather than "following the current price".
Most low volume stocks come from small companies (microcap or ACE Market). Their financial reports may be brief, rarely updated, or difficult to understand. Furthermore, analyst coverage is very limited.
Example:
A company that only generates RM5 million annually but has a market capitalisation of RM80 million — you need to ask, why aren''t other investors interested? Perhaps performance is inconsistent, or there are management issues being deliberately concealed.
Because they are rarely traded, the last done price you see may not reflect the actual value. Sometimes a movement of just RM0.005 can change the percentage movement to double digits.
Example:
A stock priced at RM0.02 rising to RM0.03 looks like a "50% increase", but in reality it was caused by just one small transaction of 5,000 units. It does not represent genuine market interest at all.
Low volume stocks are often targeted by promoters — parties who spread hype on social media, Telegram, or investor forums. They "pump" the price so that many people buy in, then they sell (dump) at the high price.
Local example:
In recent years, several penny stocks on Bursa surged extraordinarily because they were promoted in Telegram groups claiming "a major project is about to be announced". A week later, the price dropped back 70-80%.
Be wary of anyone who "promotes" low volume stocks as a "missed opportunity" or "a stock about to explode". Sometimes they themselves have a vested interest in that stock. You buy, they sell — and you''re the one who loses.
Avoid Hype. If a stock suddenly trends without official news, treat it as a warning sign, not an opportunity.
Check Average Daily Volume. If it is below 100,000 units, understand the liquidity risk first.
Use Limit Orders. Never use market orders on thinly traded stocks.
Check Fundamentals. Is the company profitable? Are there real projects? Who are the directors?
Don''t Chase "Cheap Stocks". A low price does not necessarily mean cheap — sometimes it is simply unsold because of poor performance.
Low volume stocks on Bursa Malaysia can indeed deliver large returns — but only if you know what you are doing. For most investors, it is better to focus on stocks with consistent volume and solid fundamentals.
Remember: a few sen can become expensive when you cannot sell.
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Also Read:
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Low volume stocks are stocks with few buyers and sellers each day. The main risks are difficulty selling when you want to exit, and prices can fluctuate suddenly with small transactions. You may get stuck with losses because there are no buyers.
Low volume stocks can be identified by their low average daily trading volume, wide bid-ask spreads, and limited analyst coverage. Check volume data from Bursa Malaysia or your broker''s application to understand trading activity.
Yes, advantages include potentially lower prices and large returns if the company grows. However, this is only for experienced investors who conduct thorough fundamental analysis and are prepared for long-term holdings.
Investors can focus on stocks with consistent volume and solid fundamentals, use limit orders to manage selling prices, and avoid chasing "cheap stocks" without proper research. Follow market trends and do not go against the current in low volume conditions.
To start stock investing with a smart strategy and avoid the risks of low volume stocks, you need a CDS (Central Depository System) account. We offer complete assistance along with access to advanced analytical tools: