subject: Where To Trade Otc Stocks - Trading in Stocks, Penny Stocks, Pink Sheets Or OTC [print this page] Where To Trade Otc Stocks Where To Trade Otc Stocks
Stock Trading is a much regulated market; companies are obligated to publish information about anything which could be of interest to an existing or potential investor. Therefore finding information about large scale companies is not hard and the regulators pay close attention to the published information and who is publishing the information. Where To Trade Otc Stocks
For example the New York Stock Exchange has the highest listing standards amongst the markets in the world. Every company that meets those requirements signifies that is successful in the market and is a leader in the industry in relation to business and investor interest and acceptance. The minimum requirements are number of traded shares, market value, share value, and number of shareholders. After a company is listed it must continue to meet standards set by the exchanges. The company can be delisted if it stops to meet the regulators requirements.
Starting 1913 companies who could not meet those stringent requirements started to inactively trading shares using a quotation system which was printed on pink paper issued by the National Quotation Bureau this practise continued until the introduction to an electronic system in 2000.
Those companies are usually start ups or very small and or geographically bound and try to raise money to develop a product or concept which is seen by the large and traditional investors as too risky. Some of those companies can even be bankrupt.
Companies meeting some requirements are traded Over-the-Counter Trading (OTC). Those shares are traded by using inter-dealer quotation system such as Pink Quote (operated by Pink OTC Markets) and the OTC Bulletin Board (OTCBB). Normally OTC stocks are not listed or traded on any stock exchange. However stocks quoted or traded on the OTCBB must comply with U.S. Securities and Exchange Commission (SEC) reporting requirements.
The US Securities and Exchange Commission generally define Penny Stock Trading, as trading shares with a share price of less than US$5.00. Retail investors or the general public refer often to other criteria's whilst other countries may define the term without any reference to the US Exchange commission definition.
Share being less than $1, and sometimes as low as fractions of one cent
A market capitalisation of less than $50 million or less than $25 million
All those definitions can be and are used by investors or individual very loosely and sometimes on purpose to confuse the novice investor.
To confuse you even more there are many firms trading in a share price range of a few cents and at the same time have a market capitalisation of hundreds of millions, on the other end of the scale there are corporations trading Pink Sheets and the share prices can be $50 or more.
Why would you want to trade in this high risk and confusing markets of Penny Stocks, OTC or Pink Sheets?
The answer is simple: The rewards and yields can be very high.
Do not start in this market, without research and most importantly you can afford to loose. Unless you are a real gambler it is not recommended to mortgage your family home and invest the money on Penny Stocks.
Why are there such high returns?
Just do your sums if you invest $10,000 and buy some traditional blue chip company shares you can expect a return of approx 5 to 8%. In very simple terms you could expect a return in a range of $300 to $1000 after one year.
If you use your $10,000 and buy into an emerging company with a share price of $1. If the company becomes successful the share price could skyrocket to $2 or more and you have doubled your money. Equally if the company goes the other way you can loose all your money.
Therefore it is vital you can afford to loose and you stick to your system if you set your mind you will sell at $2 share price Sell, don't get greedy some of those small companies can double their value "over night" but also can vanish "over night".
Make sure you use a trusted and reliable system/ software or us a broker you trust. If you have the right market knowledge a good a system and discipline you are on your way earning an extra income. Once you are more experience you will diversify your portfolio and can afford to invest into more risky trades and at the same time don't loose your family home. In particular always be suspicious if you are offered a "Free" trade. Why would any broker offer you something for free? He is in the business to make money and you will always pay either through hidden fees or up-front fees. Where To Trade Otc Stocks
Where To Trade Otc Stocks - Trading in Stocks, Penny Stocks, Pink Sheets Or OTC
By: Trading Expert
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