OCTBB or better known as the over the counter bulletin board stocks and pink sheet are two form of acquiring Canadian penny stocks. The former, which is the OCTBB, is required to register itself with SEC while pink sheets needs no such registration. Due to this fact many traders are unwilling to trade in pink sheet. However, they fail to understand the opportunities that they are missing out on.
Trading in Canadian OCTBB or Canadian pink sheet is not for everyone. Often this type of Canadian stock has a low liquidity rate, and sometimes companies whose worth is not more than a penny will try to impersonate itself as a big company just to dilute its shares. It so happens that people are often mislead into buying these cheap Canadian stocks via unrealistic statements and when they do, the prices falls hence making them lose their investment. Investors can avoid this problem by doing a thorough investigation when reading the filings. It is advisable to call the company and find out of the OTCBB Canadian stocks and pinks sheets in Canada.
OTC stocks are those Canadian stocks that are traded by brokers and not through the Canadian stock exchange. Any stock of Canadian market that is traded outside the TSX exchange is called OTC stocks. The two major Canadian OTC stocks are OTCBB and pink sheet as discussed above. Companies who trade in over-the-counter stocks are usually new companies or a growing company unable to meet the criteria to enlist it-self in the stock exchange of Canada. These types of companies stocks are often called Canadian small cap stocks, penny stocks, or micro cap stocks.
The trading of Canadian OTC stocks is usually done through direct dealings with brokers and market makers either over the phone or internet. The OTC stock is held by the market makers and is often sold to the brokers as and when demanded. Unlike the stock exchange, where price can be set through auction bidding on the floor, the OTC stock price is set after negotiating through a process of ask and bid between the market maker and the Canadian OTC stock broker. So if you want to trade in OTC Canadian stock then you must open a trading account with a broker offering OTC trading service in Canada. Today, there are many online OTC stock brokers in Canada who brings the market makers and traders to interact directly.
Though OTC stocks in Canada have various disadvantages associated with it, yet it has gained popularity among many investors. Many Canadian companies who were once OTC stock companies have worked their way up to the large company group those who have been qualified to cross over, have decided to remain in the Canadian OCTBB market as they consider that it is a perfect way of trading.
OCTBB Canadian Penny Stock-A High Risk investment
Mesmerized by the potentiality of massive gains in the Canadian OTCBB penny stock market, new market investors are often left with washed-out brokerage account. This usually happens when they are ill prepared and have no knowledge whatsoever in the Canadian penny stock market. However, OTC Canada does offer exciting opportunities to Canadian stock traders having tolerance for high risk investment. Only a few companies exists, which offer the same return similar to that of a Canadian small cap company. Dedicated research on how to trade on the Canadian OCTBB can prove to be more beneficial then believing on the hype newsletter or even paid advertisement.
The ideal investors for penny stock in Canada are those having a sound market experience and strong analytical skills. Besides this, these investors should have extra income that they can put up for high risk investment. So, if you feel you are one of them then go right ahead and jump into the game, but if you are new then educated yourself properly in all respect.