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Avoiding Risky OTC Markets

Avoiding Risky OTC Markets

Many people out in the world of capitalism want financial freedom. They want to leave their terrible commutes behind and break free from the chains of a boring cubicle job. They want to get rid of the micromanaging boss that never will let them get actual, meaningful work done. In short, they want to make enough money to make their own destiny. 

And participating in OTC markets can bring you to that point of financial freedom. The problem is that you need to be a great trader to even think about making money in that space. You can’t do it as a novice. So you need to educate yourself. 

Becoming a day trader is hard. You need to have the desire for financial freedom and the discipline and dedication to pull it off. One of the most valuable skills to learn when you start to trade is how to pick the right assets to deal and the right markets to participate in. Risk management and good skills for keeping track of market happening and technical charting are required for day traders. 

OTC markets mean over-the-counter markets. Known as the pink sheets, because they evolved from actual pink colored sheets where penny stocks were listed and traded, in the 1980s and 1990s, OTC markets can be profitable for certain traders. But those certain traders need to be experienced, not novices. These markets are decentralized. That means that there is no central authority that can govern how these companies disclose financial information. So the info you can find is sketchy. 

Which is why participating in these markets are only for those that can really handle the risk. They need a lot more than just a bunch of cash and the vague notion that they can pick stocks. Traders in this space need solid plans and real strategies for picking the right stock at the right time. This is not the place to just wing it. Traders in OTC markets need to be able to learn how to avoid the big losers while racking up small wins. That is the path to profitability. 

Because of the uncertain nature of their business, many cannabis businesses in the United States find it very hard to be listed on the larger, more established exchanges. The time and effort they need to put in in order to file with the SEC and disclose all their financial dealings is enormous. That is because they deal mostly in cash. Major banks won’t touch these firms, even if they operate in states where cannabis is legal. The uncertainty of potential federal enforcement is looms too large for traditional banks and their financing arms. 

So OTC markets obviously house cannabis companies with great potential, but not a lot of exposure, because they are relegated to the less prestigious exchanges. The opportunity for profits exists. It just needs to be mined by skilled and experienced traders. 

So novices need to find another way to get going in this type of world. They need a plan and an ability to manage risk before they participate in OTC markets.

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