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Pink Sheet Stocks — What They Are and How to Trade Them - YouTube
Channel: StocksToTrade
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- I often get asked,
"What's a listed stock?
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"What's an OTC stock?
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"What's a pink sheet stock?
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"What's the difference,
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"and how do I trade them differently?"
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Because you do need to
treat them differently.
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And today I'm going to talk about that.
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(upbeat music)
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Hey everyone, Lead Trainer
StocksToTrade, Tim Bohen here.
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Be sure to subscribe, and ring that bell
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Quite frequently, lately,
we've been doing once a week,
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sometimes we do twice a week, live videos,
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I want you to ring that
bell to be notified
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so that you can jump on
live, ask a question,
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maybe see a chart live,
maybe see a live trade,
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so be sure to ring that bell.
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Next thing I'm gonna talk about,
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and I'm gonna focus on OTCs
as well as pink sheets,
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but you'll hear the term listed
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verus over the counter stock,
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so, a listed stock is a stock
that trades on the NASDAQ,
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or the NYSE, we're not
gonna talk about those today
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because the topic is OTCs and pink sheets.
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So, what I like to say is
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remember, any stock can do
anything at anytime, okay?
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Apple could go out of business today,
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not likely, but it could.
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Now, so when we look at
listed stocks on the NASDAQ,
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on the NYSE, these are
typically your more, air quotes,
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real companies, okay, they're established,
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they most likely have a
little bit of a track record,
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they're not bleeding
enormous amounts of money,
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they have actual products you can buy.
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So when I think of listed stocks,
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I think of real stocks,
and you can trade those,
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day trade those with extreme volatility,
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but what's different
about the OTC stocks is,
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and the pink sheets particularly,
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and the gray sheets even more,
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these are the most speculative
of the speculative,
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and they're gonna be
the true penny stocks.
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You'll see a lot of NASDAQ
stocks, you know, for one dollar
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sometimes a little under a
dollar, two, three dollars,
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but in OTC and pink sheet land,
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this is where you get the one cent stock,
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the thousandth of a penny stocks,
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and these are the most speculative,
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which is great from a trading perspective,
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because now you're looking, these stocks,
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as what's called purely a trading vehicle.
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The reason we talk about
bag holders so much
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is people will believe the
story in a listed stock
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and maybe it's, some stock that
is long term down trending,
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it's gone from 100 dollars, to 50 dollars,
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to 20 dollars to 10 dollars,
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and many traders kind of fall in love
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with the idea behind the trade,
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because it's, again, a real company.
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What's great about the
OTCs, and this may sound
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counter intuitive, is everybody knows
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most of these companies are scams,
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most of 'em are gonna go out of business,
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if they stay in business,
they're probably gonna pivot
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from a weed company to a gold company,
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to a blockchain company,
they're always out there,
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trying to raise money,
trying to sell more stock.
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So what I love about them,
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is it makes it very clear
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to you that you're only trading the chart.
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You don't believe in the fundamentals
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of any of these companies
because lots of times they
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havent announced their
fundamentals for months or years,
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many of them are very late
to file their filings,
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may of them it's very hard
to find accurate information,
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so now, especially if you're
that purely technical trader,
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you're just gonna look
for simple breakouts,
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high volume moves, through key levels,
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breaking resistance, all
these things we talk about
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on other videos on this channel.
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Which reminds me, check out our library,
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we've got a ton of videos
talking about chart patterns,
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lot of the times I've
got a screen right up,
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breaking this stuff down.
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Now, how do I trade an OTC
stock or a pink sheet stock?
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I'm running my scans, I'm
looking for breakouts.
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Whether that be multi week,
multi month, or even better,
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multi year, the longer the
break out, the longer it's taken
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this stock to break out,
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the more likely it is to continue,
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because now it's had that time
to lure in all of the buyers
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over days, weeks, months, et cetera.
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So now if I can find that
OTC or that pink sheet stock
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that ideally has a story behind it,
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maybe it's a weed stock,
maybe it's a gold stock,
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maybe it's a cryptocurrency stock,
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and it's trading unusual volume,
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remember these are all things you can scan
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for on StocksToTrade,
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unusual volume breaking
multi month, multi week,
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multi year levels,
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that is a stock you're looking to trade.
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Then, you're just looking to
base your stop loss based off
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of support and resistance levels.
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So it's really great
as a technical trader,
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to trade these because
now it's just the chart,
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you home in on the chart,
that's all you care about,
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cause you know the
company's probably a scam,
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you know they're never
gonna make any money,
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and you know that the only
reason the stock is going up
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is because traders are doing
exactly what you're doing.
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Remember, the stock market is an auction.
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The more buyers, the more
eyeballs, the more traders trying
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to make the same move, the more potential
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that move is to continue.
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Because if everybody's
looking for these breakouts,
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and buying these breakouts,
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that's how you get the multi day,
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multi week continued moves,
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and these stocks can grind up
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way longer than you
think, as long as there's
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that bid support, as long
as the support holds,
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long as the keep continuing to trend up.
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So, remember, the biggest tip I want you
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to take away from this is,
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feel free to trade OTC stocks, feel free
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to trade pink sheet stocks,
but never believe the story,
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never believe the financials,
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trade them strictly from
a technical standpoint.
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Listed stocks, NYSE and NASDAQ,
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you can start building
that fundamental case
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and looking at the balance
sheet, looking at the sales,
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looking at their contracts,
looking at their business,
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but not in OTC and pink sheet land.
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So, lemme know below.
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I'm curious, do you trade strictly from
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a technical approach?
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Personally, I almost
always take a little bit
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of both sides into my consideration
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when I make my trade plan,
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but I wanna know, do you
strictly trade technicals?
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Cause there's a lot of
traders out there that do it,
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so thank a lot, and lemme know.
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Thanks for watching our video.
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Be sure to comment below with
any trading related question.
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