5-star brokerage rating

Best Broker for OTC Stocks and Pink Sheets Trading (2020)

Review of the best online broker for pink sheets stocks trading. Top brokerage company to buy OTC BB stocks with low commission and no surcharge.

Best Pink Sheets Stocks Broker

Pink sheet stocks are shares that do not trade on a stock exchange. Like shares that are traded on a stock exchange, the shares traded in the pink sheets represent equity in the business. However, by not being on a stock exchange, pink sheet stocks are not subject to the oversight and therefore are more susceptible to scams.

Best OTC Broker

In this article we will introduce the best online broker for pink sheets and OTC stocks in 2020 - TD Ameritrade. Unlike many competitors, the company does not have pink sheet stocks surcharges. Over-the-counter bulletin board (OTCBB), pink sheets, and penny stocks can be bought and sold at TD Ameritrade via the online trading platform thinkorswim (review) trading platforms for the same flat, straightforward pricing - $6.95 per trade.

TD Ameritrade’s flagship trading software has some really nice tools for OTC stocks traders. These include a scanner that searches for stocks. Called Stock Hacker, the screener looks at various characteristics, such as P/E ratio, % change in price, current ratio, inventory, book value per share, quick ratio, and return on assets. Up to 2,000 stocks can be displayed in the results, which can easily be narrowed by specifying ranges for the inputs.

Best Brokerage Firm OTC Stocks

There is also a tool called Company Profile. It looks at the variables that impact the revenue of a company and makes predictions on its analysis. It provides a valuation for a stock, and explains the upsides and downsides of its investigation.

The ‘Analyze’ tab in thinkorswim examines ratings, probability analysis, risk profiles, and fundamentals of stocks and ETF’s. For example, the SPDR S&P 500 exchange-traded fund SPY displays a probability graph, which estimates the likelihood of the ETF being above or below a certain price in the future.

Best Broker for Pink Sheets Stocks

The same tab shows analyst ratings for stocks. IBM, for example, has 3 stars out of 5 from S&P Capital IQ, a hold rating from Ford Equity Research, and an underperform from Credit Suisse. All of the ratings have been updated in the last month, and the reports are available for download in pdf format.

Continue to TD Ameritrade penny stocks review »

Or continue to TD Ameritrade brokerage review »

TD Ameritrade Promotion

Get $0 stock commissions and ACAT fee reimbursement.

Open TD Ameritrade Account

What are Pink Sheet/OTC Stocks?

While most public companies are traded publicly on the major stock exchanges, like the American Stock Exchange (AMEX), or the New York Stock Exchange (NYSE), or the NASDAQ, pink sheet or OTC (over the counter) stocks do not meet the listing requirements for being listed on these exchanges. These are traded over the counter via an electronic quotation system that is hosted by a company known as the OTC Markets Group. The terms ‘pink sheet stocks’ and ‘OTC stocks’ are interchangeable and refer to the same thing. The OTC Markets Group was founded in 1913 as the National Quotation Bureau. At that time, it was a private corporation that published stock quotes in newspapers on yellow or pink sheets. The term pink sheet stocks stuck and investors still use that term to refer to these types of stocks.

Trading Pink Sheet Stocks or OTC Stocks

Although the OTC Markets Group is not a stock exchange, the company works to provide reliable pricing information while linking sellers and buyers to brokers that will execute orders for these stocks on their clients’ behalf. Investors need to be aware that some brokers or brokerage firms tend to place a limit on the purchase of pink sheet stocks, or these firms may charge a higher commission rate in order to initiate pink sheet stock trades. And with some pink sheet companies, there may not be a sufficient stock volume offered for the investor who is looking to invest a large sum of cash.

Risks Involved with Pink Sheet Stocks

When looking at pink sheet stocks, it is important to know the reason that the stock was unlisted or delisted in the first place. Sometimes this is due to a recent bankruptcy, serious insolvency, small market capitalization, or thin volume. Since most over the counter companies do not file an annual report with the SEC (Securities and Exchange Commission), then they do not offer any independently audited financial reports for investors to look over. Because of this, it can be difficult or even impossible to find unbiased or reliable information about the pink sheet company’s finances.

Recommended Articles

Open free TD Ameritrade account
TD Ameritrade vs Vanguard
TD Ameritrade better commissions

Penny Stocks and Pink Sheet Stocks

Although penny stocks are not necessarily pink sheet stock, a trader may use the over the counter stocks that are listed at less than two dollars a share in order to make a speculative bet on the future of a particular company. In fact, some speculators will trade penny stocks that have the possibility of a one-hundred percent increase or more in the stock price. A dishonest speculator might even pump up the pink sheet stock price illegally via rumors in an attempt to dump the stock after buyer increase the stock’s price. This is known as a pump and dump, which is a scheme that can cost investors a lot of money.

Benefits of Purchasing Stock over the Counter

There are obviously some benefits to be reaped, however, when purchasing stocks over the counter with best broker for pink sheets stocks. Many large companies from overseas are not listed on the major U.S. stock exchanges but they can offer investors quite a lucrative return on their investments. Roche, Air France, Adidas, and Deutsche Telekom each are companies that produce billions in revenue each year – and all of them are traded over the counter as pink sheet stock. Foreign pink sheet stock typically offers greater volume and also pays out dividends to stock holders.

Talk to your financial planner about pink sheet stocks or over the counter (OTC) stocks to find out if this type of investment is a smart one for you to consider, based on your own personal preferences and your tolerance of risk.

Open Account

Open TD Ameritrade Account