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Listing in Pink Sheets
For a company to get started with Penny Stocks, they will first need to file the
Form 211 in order to be listed in Pink Sheets. This is a privately held
corporation, compared to the other option (which we will talk about later) over-
the-counter Bulletin Board, which is a service that is owned by the NASDAQ.
There are many companies that use Pink Sheets to work with and when they fill
out the Form 211, they will need to submit it over to the OTC Compliance Unit.
The market maker is going to process the listing for the company. The broker
and dealer will be able to quote a price for this company, as long as the company
is pretty transparent. However, there are some companies that won’t commit to
this transparency because they won’t submit their current information on
business financials.
For the companies that are listed using the Pink Sheets, you will find that they
are often small setup. This company will not have to work with the SEC during
the trading time and they don’t have to file their periodic reports. Now some of
them will do this filing in order to show what they are doing and to help the
investor feel more comfortable investing in them, but this is not mandatory. In
many cases, it can be difficult to get information in order to understand
companies that are on the Pink Sheets because you just don’t have the
information that is needed to get started.
The Benefits of Trading Pink Sheets
Despite the fact that the companies who use Pink Sheets are not required to be
transparent or file periodic updates, an investor is usually going to find some
pretty good options to trade in Penny Stocks with these Pink Sheets. You have
the possibility of getting a high return because these are the Stocks that are
volatile. There are also some companies that are in this group that used to be

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strong, but for some reason or another had to leave the major exchanges because
of a strict requirement they no longer met. They may still be good companies to
trade with and you could make some good profits from it.
It is also possible to find obscure companies to trade with in order to help that
company grow before they move over to one of the major exchanges. You would
be able to invest with these companies early on and this could give you a huge
reward later as they start to grow and move over to the Stock Exchange.
In addition, the Pink Sheets system has a tier system that helps you to
differentiate between the companies that are there. This helps you to figure out
which Stocks are higher risk and which ones are lower risk based on the
classifications that are set. You are able to pick whichever risk setting that you
are happy and comfortable with, but as a beginner, it is nice to know which ones
fall into each category to help you make a decision.
If you want to use the Pink Sheets as part of your trading strategy, you need to
make sure that you really do your research. Pink Sheets is not going to provide
you with much information about the companies you are trading with and if you
just randomly pick a company, you are increasing your risk and making it likely
that you will lose all of your money.