Pink Sheets Penny Stocks

If you are interested in small cap stocks investment, you must have heard the term “Pink sheets penny stocks”. The term “pink sheets” in fact comes from the color of paper the stock quotes were originally printed on but at the present it refers to the electronic quotation system used for a range of OTC securities.

Pink sheets penny stocks are basically the stocks with a price, lower than $5.00 that trade on the Pink Sheets electronic quotation service. The question may arise in the mind of investors that what exactly is the pink sheets and how does it differ from the OTCBB and major markets like the NASDAQ and NYSE?

The main point to know is that pink sheets is not a registered stock exchange but a computerized quotation system and the stocks that are listed on the pink sheets are generally stocks that could not fulfill the specific requirements of a major stock exchange. One more point is that other stock exchanges are registered from Securities and Exchange Commission (SEC) but there is no regulation of pink sheets toward SEC. As such there are practically no requirements for historical or even current financial data though companies issuing stock on the Pink Sheets are at least bound by both federal and state security laws.

As there is lack of regulation, so the pink sheets can be a dangerous place to buy small cap stocks. If you are interested to buy pink sheets stocks, consequently you must need to pay full diligence and conduct your own research. Pink sheets stocks are much volatile and their performance is unpredictable, it’s highly recommended that an investor stick to trading with money he can afford to lose and the percentage of investment should no more than 10% of his portfolio.

If you have decided to jump into the market, and want to invest in the pink sheets or the OTCBB small cap stocks, it’s better to use different proven stock strategies to limit your risk; this portion of your overall portfolio can very easily become your most profitable one.