lowtrade

[lowtrade]

Wow having trouble with my internet. Have lost connection twice at the end of 2 long posts and lost them both. DAAA saving this time along the way. But this one is going to be shorter.

Just had a PM question I'm taking to the board, because the answer covers a good subject I haven't covered lately. Share structure of a start up company. I started before posting about business structure of a start up. Which was long and ended with posting the answer of this question;

What's the best A/S and or OS of an OTC company to trade?

Lets reverse things, this time. Answer question first, back ground last.

Basic, simple and clean;

It doesn't matter what the A/S and or OS is for trading an OTC stock; IMO. Just like the girls say, size doesn't matter, it's how one uses it.

What matters is the new issued ratio to the OS, seen in any dilution. Because the larger the ratio, the longer the price runs. And the increase in Authorized signals the expectation for future funding shares being issued by the company. The main OTC game requirement. New shares in big guys hands for sale.

I'd trade a stock with an A/S of 5 bil and OS of 2.5 bil, just as quick as one with an A/S of 100 mi and OS of 10 mil. With one caveat; Low float OTC stocks pop larger, then big board stocks.

Because the OTC market has Market Maker middle men and the big boards have most orders close electronically. Market Makers can front trade, the two tier OTC trading platform. Naked shorting fast moving emotion runs. Electronic trading can't. (Don't want to get into black pools and specialists, at the big board) But, M&Ms can sell shares they don't own, into a low supply run, feeding/creating buying emotion, for large volume trade fees. Then cover/settle days later, during the retrace. That's why you often see close to, or the entire OS, trade in a day, at the OTC. Thus the fact of share premium restrictions of low floats stock supply/demand at the big boards, is not holding back emotion buying at the OTC.




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Now for the VERY important back ground info every trader and investor should know. I can't stress enough, how important I feel the info in the following video education links is !!!

"Knowledge is the first step of enlightenment" That just popped into my head. I don't think I've heard it before, but I like it. Have to Google it, to see if I can claim the quote. LOL

The point I was leading to, before that mind burst, was all sections and sub sections at Khan Academy "Finance & Capital Markets" educational section. Should be read and understood by every trader/investor that expects to be successful. To aid with the ability to evaluate big board stocks. You got to know the basics, to be able to evaluate what's happening or may happen at the market correctly. Just like knowing the rules for any sport you watch on TV. Cheering is far from understanding. Humm, I like that one also. LOL Kind of fits the average pennylander.

And Specifically the sub-section on how start ups, start and grow in "Life of a company, from birth to death" for OTC business back ground knowledge.

"Finance & Capital Markets"
http://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds

"Life of a company, from birth to death"
http://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/venture-capital-and-capital-markets/v/raising-money-for-a-startup


Happy studying.