DD Support Board and Research Team

[Realityhurts]

Well, a rather simplistic way to look at it is that on many OTC tickers, fresh supply is always hitting market in the form of conversions. When the market is hot, buyers overwhelm those sellers. If those sellers dry up for various reasons, huge runs can occur from depressed levels. People cash out at all levels, people buy at all levels. Say you were insanely lucky and sold the top in one stock, perhaps your next buy is a dud and you lose 25%. Since people rarely hold on to cash, it doesn't take very many trades like that for an account to wipe out even if a few good trades are mixed in. Combine that with toxic supply hitting the market and, you have a scenario where lower prices and wider spreads have to occur. In a perfect world, the toxic guys would only sell what the market could reasonably support. Unfortunately, it doesn't work that way. Even non dilutive tickers experience a chilling effect in total market liquidity drawdowns.

The experienced OTC trader probably won't be a seller at the top as they wouldn't still be in. So, they take money from someone buying in who feels like genius for a while. Perhaps that person cashes out too. If their risk tolerance is high, they will lose it all at some point. Just a question of when.

If they truly believe in everything, they will then deposit fresh funds to buy "cheapies".

I'm not trying to be condescending about this. It's just an unfortunate reality. The OTC relies on believers. When a few stocks make huge runs or a nascent industry is popular, people get sucked in.

The boom is never as strong as it appears while it is occurring. If I could properly play the entirety of the boom sequence, I would. Unfortunately, I have no predictive talents.