On Wednesday, I gave you several ways to juice up a small account and turn it into a real “trading machine.”
There was a lot of great advice like finding the right broker, having a great platform, like StocksToTrade, and properly managing your risk..
But if you blinked, you might have missed my mention of a trade that can be a “goldmine for small accounts.”
I’d like to talk some more about that today…
But before I get to it, if you’re looking for some more major fuel to grow your account, you need to check out my Monday setup.
This pattern mysteriously shows up only on that day, and it can move fast!
We’re talking about moves that could deliver more in one morning than most people see in a month!
And for a limited time, we’re offering the Monday setup for just $7!
That’s an 85% discount off the regular price.
Monday is coming fast…
So, check out this pattern ASAP in my video tutorial below.
The stock play I want to talk about today isn’t for everybody…
But if you have the right approach and know what you’re doing, the reward can very much be worth the risk.
I’ll be completely honest with you on Over-the-Counter (OTC) stocks. They can be huge moneymakers, but they can also blow up your account quickly.
I’ll give you the risks in trading them…
But I’ll also teach you how to do it if you think you’re ready.
Table of Contents
First, What is an OTC Stock?
These are stocks that don’t trade on major exchanges like the NASDAQ or NYSE.
They’re unregulated, low-volume, and often tied to sketchy companies. Think of them as the wildcards of the market with high risk, high volatility…
They’re not for the faint of heart.
You’re not trading the company… you’re trading the chart, the hype, and the volume. Period.
Most traders would be better off sticking to high-volume setups on listed exchanges.
The Drawbacks of OTC Trading
Lack of regulation:
OTCs aren’t held to the same standards as NASDAQ or NYSE-listed companies. They can go years without filing anything with the SEC.
And when they do file, it’s often questionable at best.
That lack of oversight makes these stocks ripe for manipulation, with little accountability.
Liquidity disappears fast:
Volume in OTCs can dry up instantly.
If you’re holding a stock and no one’s buying, you’re stuck. You can’t sell without a buyer on the other side.
Zero transparency:
It should come as no surprise that most OTC companies are a mess…
No financials or investor updates, and sometimes not even a working website.
You’re not trading a real company. You’re just trading pure price action.
And while that’s fine for penny stocks on legit exchanges, with OTCs, that can be a huge gamble.
High trading fees:
As I mentioned on Wednesday, OTCs are rarely commission-free.
Many brokers charge higher fees to handle OTC trades, and some don’t allow OTC trading at all.
So don’t be shocked when you check your account and see unexpected costs after you’ve traded OTCs.
Still Want to Trade OTCs?
Great! If you’re an experienced trader and you understand the risks, here’s what you need to know…
When they run, they really run:
Yes, OTCs can deliver insane percentage gains in a short time.
The magnitude of OTC moves is almost unheard of on listed exchanges.
But don’t forget, many of these spikes are manipulated pump-and-dumps.
However, if you’re experienced, disciplined, and fast, you can ride the wave.
They’re great for small accounts:
If you’re trading with limited capital, OTCs offer ultra-low prices.
You can take large positions in sub-penny stocks and still manage risk.
Many new traders have small accounts…But hear me out, newbies. You should not trade OTCs.
OTCs are for seasoned traders only.
They follow repeatable patterns:
This is what I like about OTCs.
These trades are risky, but they often follow very predictable patterns.
My favorite?
The Morning Panic Dip Buy, a classic setup I’ve taught for years. OTCs often panic at the open and snap back hard.
The Right Way to Trade OTCs
If you’re going to do it, here’s how to do it smart:
Focus on volume:
Only trade stocks moving hundreds of millions (or billions) of shares.
Remember, no volume = no exit.
Be fast:
These aren’t investments. They’re quick trades based on momentum, not fundamentals.
Get in, take your gains, and get out.
And, of course, always set your stop loss before you enter the trade. If it moves the wrong way, you can exit quickly.
Trade the chart, not the company:
Most OTC companies are garbage.
Forget the business model… Just follow the price action.
Stay laser-focused:
Don’t get distracted…
If you’re trading OTCs, that’s all you should be thinking about. Obviously, these trades are not for part-time traders. They require your full attention.
My Final Thoughts…
OTC stocks are like the Wild West of trading… low regulation, low transparency, and low liquidity.
Sure, they can explode for 1,000%+ moves, but they can just as easily trap you with no exit.
That said, if you’re disciplined and have your strategy down pat, there’s opportunity in the chaos. Just know the risks.
If you’re new or not ready to treat these like the wild animals they are…Stay away.
But if you’re going in, go in with a plan…
And go in fast.
Have a great weekend, everyone. See you back here on Monday.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
- Learn why forcing a trade can only hurt you.
- Knowing when to take profits can be harder than you think.
- What we can glean from moves in the broad market.