Risk and OTC Markets as a Novice Investor 

Risk is an inherent part of life. There is no getting around it. The only way to deal with it is to mitigate it to the best of your ability and learn how to make it your friend. For example, in capitalism and investing, there is no fear of risk. There is only sensing its place in a range of opportunities. You need to take risks with capital in order to create more capital. But you need to be smart with it. Which is why you need to avoid the OTC markets until you are ready to handle them.

OTC markets are over the counter exchanges where small companies can offer their shares for purchase and investment. There is not overarching body like the New York Stock Exchange overseeing these companies and mandaing enough financial disclosure to make investing easy and simple. There is a bit of a Wild West quality to these markets. So that means there is opportunity to make a profit with these stocks, but the key is that you don’t want to end up in an unmarked grave next to that particular frontier town. You want to tread lightly until you get the lay of the land.

OTC markets can be catnip for those bad actors that want to perpetrate pump and dump schemes. A pump and dump scheme is a racker where a market maker buys up a majority of shares of a company and looks to drive up the prices of those shares by touting that company within the media ecosystem of financial comings and goings. The market makers do this with sympathetic analysts and columnists that like to take a stake in these companies as well. The conflict of interest problem does not really come into play here.

The inherent riskiness of these OTC markets demand that you play with the big boys. You need to be able to understand the right strategies and techniques to find the stocks that will actually do well and you need to be well-practiced in risk management. Risk management is such a valuable part of being a good day trader. You take care to plan each and every trade and keep good records so you always know where you stand. Ignorance is not bliss when you are dealing with OTC markets. You want to know as much information about your stocks as possible.

The problem with OTC markets is that you need to know a lot of the right kind of information and the nature of these markets means that that is hard to find. Which is why you need to have years of screentime in order to take a shot at making money in OTC markets. These is not the place for the newbie trader. You want to get plenty of time paper trading before you risk real money in the stock market and you want to take you time day trading in calmer waters before venturing into the OTC markets. There is no substitute for careful, practiced advancements of your skills in this day trading world. You want to be in control at all times.

That is why a day trading education site makes so much sense. You want to be able to learn the right way to approach the market and a website filled with veteran trader instructors and a community that shares your hopes and dreams is a great place to start to learn how to day trade.

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