What Are Pink Sheets?

Pink sheet investing is not for the faint of heart.  The pink sheets represent stocks, investment shares in a given company, which are traded off market.  By off market it is meant the more typical stock investment forums such as the New York Stock Exchange (NYSE) or the NASDAQ.  Pink sheets have their namesake due to the fact that they were originally, in the early beginnings of the stock market trading system, actually maintained on pink pieces of papers.  The companies who did not trade in the major markets were literally listed one by one on pink sheets of paper.  The reasons for a company not being listed on the major markets and instead falling into the pink sheet trading sector are typically due to their registration status, country of origin, or the actual value of the stock.  Pink sheets typically consist, but not exclusively, of what are referred to as penny stocks.  These penny stocks, often valued at portions of a cent up to several cents or even a dollar or more, change value often and at times very quickly.  For this reason, the pink sheet investing is seen as a quickly moving, volatile and often risky place to invest in stocks.

Pink Sheet Trading Advantages

Pink sheet trading, all warnings aside, is not necessarily a poor or risky investment.  While to the unpracticed or novice trader it is true that they can pose risk when investing, they often too can make investors a lot of money fast.  Advantages to pink sheet trading include the following:

Ability to purchase large volumes of shares due to low per stock value.  These large volumes, should they increase in value, can make the investor a lot of quick money.

Pink sheet investing allows investors to purchase stock in companies who are new and not yet meeting the requirements of the major stock indexes such as NYSE or NASDAQ.  In this sense an investor in pink sheet trading can get in on a stock before it reaches the regular market.

The pink sheets include some major companies, solid investments very often, that due to the fact they are foreign owned and do not wish to take the effort to be recognized by the U.S. based major markets.  Excellent examples of pink sheet companies like these are BMW and Nintendo.

Related posts:

1. What Is Over The Counter Trading?
2. What Time Of Day Can I Trade?
3. When Is Day Trading Legal?
4. What Are Penny Stocks?
5. What Is A Stock?