Restricted vs Unrestricted Stocks: What's The Difference?

As a trader, you need to understand the difference between restricted and unrestricted shares. It's not necessarily fun information, but it’s essential. I’ll explain the difference and why it matters to you...

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FULL DESCRIPTION

This probably won’t be the most exciting topic, but it's crucial that you understand it ... Today we’re talking about restricted versus unrestricted stocks.

So what’s the difference between these types of shares?

Restricted shares are shares owned by insiders — big investors or corporate management. They have different time frames so they aren’t easily sold. Some are restricted from being sold anywhere from one to three years.

A lot of management, insiders, and promoters will buy restricted stocks to sell when the shares become unrestricted. When they try to pump or hype the stock, it doesn't necessarily matter how much the stock goes up. They just need to hype it at the right time so they can actually sell their shares.

And once the restricted shares become unrestricted, you often see pumps. That’s where the stock spikes for a few days ... and then it plummets.

So why does this happen? Companies or insiders fabricate news to lure traders into buying the now unrestricted shares before they become restricted again. They want to push up the value of the unrestricted shares as much as possible, then sell. That’s how they profit.

That’s the game in a nutshell. See why you need to understand the difference between restricted and unrestricted shares?

Once you understand how the game works, you can ride the hype ... But you gotta be smart about it. Sometimes, you can also play the opposite side and short sell the stock when those shares are unrestricted and sold.

Because these investors want to sell these shares most smart traders want to short. Because usually once restricted shares become unrestricted, the stock often crashes. But be careful — sometimes there are no shares to short. Never force a trade.

What’s your opinion on pump and dumps? Do you trade them or stay away? Leave a comment if you’ve traded them before!

#TimothySykes #Pennystocks #Investing

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Hey, it’s Tim Sykes, millionaire mentor and trader. Thank you for watching my videos. I hope that they help you. I want to share everything that I've learned over the years. You can check out more videos right over there, and also click ‘subscribe’ so that you can watch all of these videos, get that knowledge and become my next millionaire student.*

* Results may not be typical and may vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here