How to trade Pink Sheet stocks

Find out how Pink Sheets work and how you can invest in some.

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

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

  1. 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.
  2. Fund your account. Your broker can walk you through this. Make sure you have enough to cover the position you want to open.
  3. Research, research, research. You need to make sure you do plenty of research into the stocks you want to invest in.
  4. Find the stock on your chosen platform. Just type in its ticker symbol or company name and you should find it.
  5. Buy your Pink Sheet stock. You’re good to go!

Which UK brokers let you trade Pink sheets?

Does it trade Pink sheets?
Picture not describedSaxo MarketsGo to siteCapital at risk
Picture not describedeToroGo to siteCapital at risk
Picture not describedFinecoGo to siteCapital at risk
Picture not describedDegiroGo to siteCapital at risk
Picture not describedIGGo to siteCapital at risk
Picture not describedHargreaves LansdownGo to siteCapital at risk
Picture not describedTrading212Capital at risk
Picture not describedRevolutRead reviewCapital at risk
Picture not describedFreetradeRead reviewCapital at risk
Picture not describedStakeGo to siteCapital at risk
Picture not describedinteractive investorGo to siteCapital at risk
Picture not describedAj BellGo to siteCapital at risk
Picture not describedHalifaxRead reviewCapital at risk

Pink Sheets vs Penny stocks

These terms are sometimes used interchangeably but there’s a key difference. Pink Sheets is 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.

Bottom line

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.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

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