Posted on 25 August 2012.
There is no doubt that trading Pink Sheets penny stocks continue to grow in popularity. More investors than ever before are crediting the Pink Sheets with helping them earn large returns. This is because the Pink Sheets are one of the only penny stock listing services to list all of the penny stocks on the market. Most penny investors understand the risks they take when investing in low cost stock. Although penny stocks cost less than five dollars per share, leaving lots of room for appreciation, they come with a high level of risk. Most represent new companies and products that have little financial history.
Most exchanges that list penny stocks, such as the NASDAQ, require all stocks to meet a certain set of criteria in order to lower the risk. NASDAQ stocks must have a certain amount of financial history and market capitalization, and they must be registered with the SEC. Other, more lax, listing services, such as the Over the Counter Bulletin Board (OTCBB), have fewer requirements. Even the OTCBB, however, requires its stocks to be registered with the SEC. Only when trading Pink Sheets penny stocks will you have access to all of the low cost stocks on the market, because the Pink Sheets have virtually no listing requirements.
All stocks carry risk, but investors trading Pink Sheets penny stocks have to be particularly careful. The same lack of listing requirements that gives the Pink Sheets their huge selection of stocks, means that illegitimate and scam penny stocks may be listed alongside the winners. Doing proper research is more important than ever when you are trading from the Pink Sheets. Find out as much as you can about each stock and each company before making a decision, and be sure to diversify your portfolio. Only with caution can you take full advantage of trading Pink Sheets penny stocks.
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