You may have been trading pink sheets stocks successfully and are not sure why you would want to try trading OTCBB stocks. Especially since pink sheet stocks are cheaper than OTC stocks
To start, let’s take a look at these stock trading platforms. Over the counter stocks (OTC) also coined OTCBB (where they are traded) and called pennies stocks. Pink sheets stocks are very cheap, usually under $1. These stocks are offered by small companies or falling companies in trouble. Over the counter penny stocks are similar, but they’re required to file with the Securities Exchange Commission (SEC).
Researching and analyzing stocks is paramount prior to making an investment. Pink sheet penny stocks are a problem to research as more often than not, accurate information can be difficult to obtain and the stock price can easily be manipulated.
Since OTC stocks must file with the SEC, they are generally a lot more reliable. Over the counter penny stocks are also required to meet certain minimum requirements, resulting in much more security for investors.
Most investors fail to keep up to date with their pink sheet status, which can lead to big losses. Penny stocks can make sudden changes; companies who trade with pink sheet penny stocks can go bankrupt or stock price my suddenly plummet.
There’s no guarantee that an OTC stock won’t suffer the same fate, but when an OTC company is having trouble meeting the requirements for SEC filings, investors will be notified of the problem via a special number amended to the stock’s listing.
So, why move from pink sheets to OTC stocks? OTC stocks are a safer investment and less of a gamble. It’s easier to find more information about OTC companies, and while companies may not meet the requirements of the NASDAQ or NYSE, they are held to a standard.
It is clear that Pink sheets stocks are a definite investment risk, so for many investors, switching to over the counter (OTCBB) simply makes sense.
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