Penny Stock Trading With Pink Sheets
If you are seriously considering penny stock trading, you will eventually need to familiarize yourself with the Pink Sheets.
This over-the-counter electronic quotation service is not technically an exchange like the NASDAQ or the NYSE.
Rather they are a quotation service where brokers can list shares and values.
Defining The Pink OTC Markets The quotation is technically called the Pink OTC Markets (OTC is short for "over-the-counter") and for nearly a century prior to moving to an entirely electronic system they were listed and distributed on pink paper (hence the name).
Multiple components comprise the Pink OTC Markets.
Here is a quick summary of the basics: The Pink Sheets News Service provides OTC market news, while the Pink Quotes provide stock categorizations divided by disclosure levels.
A stock must meet their disclosure requirements to list on their OTCQX, with large stocks appearing on their PremiereQX and less established penny stocks appearing on their PrimeQX service.
With Increased Opportunity Comes Increased Risk It is important for you to understand that shares quoted on the Pink Sheets are not reported to the SEC (the Securities and Exchange Commission) and do not need to file public earnings data.
Often times, stocks which fail a requirement for the NASDAQ or the NYSE are at least temporarily listed on this listing service.
This is partially why Pink Sheets are often used in penny stock trading.
With all that negativity you would think nobody would mess around with Pink Sheets, but in fact it is a system which attempts to self-regulate to make it difficult for novice investors to trade them.
You'll find shares listed under specific categories which help you identify and understand the fundamental problems with those shares before you trade.
The Volatility of Speculation These shares are highly speculative and while they may feature jumps in value in the hundreds or even thousands, they can also experience the same level drops.
The combination of little public data and their high volatility make them highly vulnerable to speculative manipulation.
Many schemes within the rampant phenomenon of penny stock fraud operate through Pink Sheets or the OTCBB (Over-the-Counter Bulletin Board).
I don't mean to discourage you from exploring this particular quotation service, but you have to understand that most savvy investors who broker with them also have a significant stake in blue chip stocks which feature higher value and higher stability to counterbalance the risks involved with trading penny stocks on the Pink Sheets.
This over-the-counter electronic quotation service is not technically an exchange like the NASDAQ or the NYSE.
Rather they are a quotation service where brokers can list shares and values.
Defining The Pink OTC Markets The quotation is technically called the Pink OTC Markets (OTC is short for "over-the-counter") and for nearly a century prior to moving to an entirely electronic system they were listed and distributed on pink paper (hence the name).
Multiple components comprise the Pink OTC Markets.
Here is a quick summary of the basics: The Pink Sheets News Service provides OTC market news, while the Pink Quotes provide stock categorizations divided by disclosure levels.
A stock must meet their disclosure requirements to list on their OTCQX, with large stocks appearing on their PremiereQX and less established penny stocks appearing on their PrimeQX service.
With Increased Opportunity Comes Increased Risk It is important for you to understand that shares quoted on the Pink Sheets are not reported to the SEC (the Securities and Exchange Commission) and do not need to file public earnings data.
Often times, stocks which fail a requirement for the NASDAQ or the NYSE are at least temporarily listed on this listing service.
This is partially why Pink Sheets are often used in penny stock trading.
With all that negativity you would think nobody would mess around with Pink Sheets, but in fact it is a system which attempts to self-regulate to make it difficult for novice investors to trade them.
You'll find shares listed under specific categories which help you identify and understand the fundamental problems with those shares before you trade.
The Volatility of Speculation These shares are highly speculative and while they may feature jumps in value in the hundreds or even thousands, they can also experience the same level drops.
The combination of little public data and their high volatility make them highly vulnerable to speculative manipulation.
Many schemes within the rampant phenomenon of penny stock fraud operate through Pink Sheets or the OTCBB (Over-the-Counter Bulletin Board).
I don't mean to discourage you from exploring this particular quotation service, but you have to understand that most savvy investors who broker with them also have a significant stake in blue chip stocks which feature higher value and higher stability to counterbalance the risks involved with trading penny stocks on the Pink Sheets.
Source...