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Pink sheet stocks are a type of over the market stocks. They’re not listed on major stock exchanges. Find out more about what pink sheet stocks are, some examples of pink sheet stocks and how to trade them.
What are pink sheets?
Pink sheet listings are ones which aren’t listed on major stock exchanges such as Nasdaq, New York Stock Exchange (NYSE), or the London Stock Exchange (LSE). These are stocks sold over the counter (OTC) and are often penny stocks, which, as their name suggests, cost pennies to buy.
There are lots of companies which choose to trade over the counter but aren’t considered to be penny stocks, usually to keep the costs down.
Pink OTC or OTC Pink is one of the three tiers operated by the OTC Markets Group. The three tiers refer to how much financial reporting the companies offer up, with pink being the lowest tier.
Companies don’t have to jump through as many hoops to trade in the OTC Markets group – they don’t need to file with the Securities and Exchange Commission (SEC) or disclose company financials, as you generally see with traditionally floated companies.
Examples of pink sheet stocks
There are more than 10,000 stocks on the OTC markets. Some are on it to avoid filing with the SEC, while others may have been delisted from other exchanges. Some companies on the OTC market include:
How to buy pink sheet stocks
- Find yourself a broker. Not all brokers let you buy pink sheet stocks, so you need to check with your chosen broker. From the ones we’ve reviewed on our site, Trading 212 and Saxo trader let you trade pink stocks.
- Fund your account. Your broker can walk you through this. Make sure you have enough to cover the position you want to open.
- Research, research, research. You need to make sure you do plenty of research into the stocks you want to invest in.
- Find the stock on your chosen platform. Just type in its ticker symbol or company name and you should find it.
- Buy your pink sheet stock. You’re good to go!
Where can I buy pink sheet stocks?
Here are some UK brokers that let you trade pink sheets. Double check that the provider you choose has the pink sheet stock you’d like to invest in on its platform.
|Provider||Does it trade pink sheets?|
|Saxo Markets||Capital at risk|
|eToro||Go to siteCapital at risk|
|Fineco||Capital at risk|
|Degiro||Capital at risk|
|IG||Go to siteCapital at risk|
|Hargreaves Lansdown||Go to siteCapital at risk|
|Trading212||Capital at risk|
|Revolut||Read reviewCapital at risk|
|Freetrade||Read reviewCapital at risk|
|Stake||Capital at risk|
|interactive investor||Go to siteCapital at risk|
|Aj Bell||Go to siteCapital at risk|
|Halifax||Read reviewCapital at risk|
Pink sheets vs penny stocks
These terms are sometimes used interchangeably but there’s a key difference. “Pink sheets” refers to the listing service, while penny stocks refer to the price of the stocks.
Penny stocks are stocks that trade for less than $5USD. Some penny stocks trade on well known stock exchanges such as Nasdaq or London Stock Exchange (LSE).
Pink sheet stocks tend to be cheaper but don’t necessarily count as penny stocks.
The risks of trading pink sheet stocks
Pink sheet stocks and penny stocks are more risky than traditional stocks. There aren’t as many regulations or requirements and it can be difficult to fully research as the companies don’t need to release as much financial information as they do if they list on large stock exchanges. You can mitigate this risk by doing as much research as you can into the stocks you’re interested in.
As these stocks aren’t traded as often, considered to be “thinly traded stocks”, it can be difficult to make trades with profitability.
Why are they called pink sheets?
When trades and quotes were done physically, the paper was, you guessed it, pink! That’s it – the name stuck.
Pros and cons of pink sheet stocks
- Adds some diversification to your portfolio
- Potential for lower priced stocks
- Give investors access to companies unable to float on traditional exchanges
- Less regulation for companies listed
- Not quite as liquid as traditional shares
Bottom line: Are pink sheet stocks a good investment?
Pink sheet stocks and over-the-counter stocks can be a great opportunity for investors, but also a risky one. These companies aren’t held to the same standards as traditionally floated stocks which can make them hard to value and research. Double check that your chosen provider lets you trade the specific stocks you want, and make sure you know the fees.
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