trading strategies for bulletin board securities

A lot of traders ask me for OTC trading strategies…

When it comes to trading, I'm like a boring old man. I wear't like to reinvent the wheel. I equal to wedge to a few key strategies. If it personal't stone-broke, don't fix it!

Over-the-counter (over-the-tabulator) stocks come up a lot in my Pre-Market Prep sessions — with good reason. They can experience huge price spikes. That's appealing to traders attempting to farm their accounts.

The problem? They're extremely illiquid in the premarket, so it's knotty to review Unlisted data before the marketplace opens.

My familiar response to traders curious in OTCs? Bond a few criterial approaches:

If you took the gap, betray the opening
Anticipate morning panics
Look for the afternoon OTSwizzle

Not sure what any of it means? Let's fag in.

Table of Contents

1 What Are OTC Stocks?
2 How to Find Over-the-counter Stocks to Trade
- 2.1 Finding OTC Stocks to Trade
3 My Top Strategies for Trading OTCs
- 3.1 OTC Trading Scheme #1: If You Took the Opening, Sell the Gap
- 3.2 Unlisted Trading Strategy #2: Anticipate Morning Panic Dip Buys
- 3.3 OTC Trading Scheme #3: Look for the Afternoon OTSwizzle Pattern
4 OTC What I'm Expression?
5 One Political program. One System. All Tool

What Are OTC Stocks?

To understand Unlisted stocks, you must understand where they trade — OTC markets.

Over-the-counter markets are different from major stock exchanges comparable the New York Stock Exchange (NYSE) and the Nasdaq. They're off-exchange markets where ancestry shares are bought and sold-out through broker-trader networks.

A agent-dealer is an entity registered with the Security system Exchange Commission (SEC) and Financial Manufacture Regulatory Authority (FINRA) that buys and sells stocks or other securities.

A broker-bargainer network is a clustering of these broker-dealers working together.

Thither are four groups: Over-the-counter Best Market (OTCQX), the OTC Bulletin Board (OTCQB), the pink sheets (OTCPK), and the greyish sheets (Intermediate).

And all together, in that location are over 10,000 OTC stocks.

Want to beef informed OTC specifics? Sound out this post.

Let me blunt — Unlisted stocks and markets don't receive a sterling repute. That's because they're not as extremely thermostated equally the star exchanges.

As a outcome, you're often look at less desirable stocks. Shell companies, delisted companies, companies that failed to meet reporting requirements, or companies on the verge of or even in bankruptcy — you'll receive them every last on Unlisted exchanges.

They're not all junk, though. For example, the American deposit receipts (ADRs) of many companies trade on OTC markets.

How to Discover OTC Stocks to Trade

Just because we've had hot OTC runners in the past doesn't nasty you can just pick any OTC blood and trade IT.

First base, make sure you have an OTC-compatible broker — don't assume yours supports OTC stocks.

Also, be in for to bod a case for every deal out.

In this post, I lecture about how every potential trade needs to check the boxes. I believe this is a polar post all trader should read. If a stock doesn't gather basic criteria — wish having a catalyst and enough of liquidity — take a long, hard view why you're trading.

Finding Over-the-counter Stocks to Barter

OK! Ready to start scanning for hot OTCs?

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My Uppermost Strategies for Trading OTCs

Let's say you found a hot OTC moon curser, but you're not sure about your next step. Here are my three common approaches for trading them…

Over-the-counter Trading Scheme #1: If You Took the Gap, Sell the Gap

Did you take the gap?

No, I'm non talking about the clothing store.

In trading, the gap refers to the difference between a stock's damage at the previous confidential and the next day's opening price. A gapper is a stock that gaps up from the last day's closing price.

When a stock gaps, it could go into one of two directions. It could either keep going … or crap out.

With OTCs, it's more than often the latter. That's why my standard approach is if you bought the gap, deal out the gap.

OTC Trading Scheme #2: Look for Morning Panic Dip Buys

Morning panic dip buys are a favorite of many OTC traders and small-account traders.

My first-string followers know that I'm a vast fan of another morning pattern, the dip and rip. Piece they mightiness sound similar, don't confuse it with the morning panic dip buy. Thither's a big difference of opinion.

The free fall and rip is a pattern where you buy into strength.
With the morning panic dip buy, you buy into weakness.

With morning panics, the stocks lean to bounce, then fade future in the day.

When looking a morning terror, you deprivation to examine to find a stock that has been uptrending for days Oregon weeks. It's gapping up and concluding at Oregon near the high of the day.

Then, you husk information technology.

The sorcerous happens when buyers keep rushing in, thinking the tired will only climb up. It won't. The loud panic will occur in time.

When an OTC has that panic, a trader could buy into the panic and then sell into the bounce that usually follows. Of course, information technology's important to receive a stop in place. And be spread to cut losses if that bounce doesn't come.

Learn many about the morning panic pattern here:

OTC Trading Strategy #3: Search the Afternoon OTSwizzle Pattern

I'm big on second chances with stocks. And then if an OTC doesn't have a morning panic, look for the afternoon OTSwizzle.

The OTSwizzle is a pattern coined past dealer Dom Mastromatteo, WHO's been happening the SteadyTrade podcast a few times. He explains it thoroughly in this instalment of TWIST:

With this radiation diagram, you look for a caudex that has a morning spike, which then goes sideways for an extended period in between a chain of mountains.

Then — usually in the afternoon — you're looking to buy the upper part of the range, often a high-of-day ruin. And you risk the bottom end of that communication channel. If information technology works atomic number 3 plotted, you ideally sell into strength.

The gain of this pattern is it can spring you clip to see it coming. You've got a neckcloth that's gapping up. It's near a breakout on the daily graph. So you stalk it and wait for it to break out. Patc you're stalking, you can make a careful trading plan.

OTC What I'm Saying?

Thither's a reason why so many traders love OTCs. Their sketchiness and volatility can represent chilling, but that can also lead to crazy price moves.

These fast movements make it extra important to approach trades with a plan in place.

If you realize these tierce standard OTC strategies, you've got trey different approaches to use depending on your trading style and the circumstances of the tired in question.

Knowledge is power! The more potential strategies you have on hand, the more nimble you can live during the fast trading day.

Want to keep learning? If you're ready to grade up your trading education, regard joining my mentorship plan, the SteadyTrade Team. Together, we dungeon improving a bit tur every day…

Have got you traded OTCs? What's your favorite strategy? Get out a gossip below … I making love listening how traders approach the market.