Over the counter stocks are stocks that are from small or new companies that have not yet grown enough to meet the requirements to trade their stock in the major trade markets. Over the counter - sometimes referred to as OTC - stocks are usually traded through broker dealers and the broker will interact directly with market makers.
With the increase in technology you are able to trade over the counter stocks online and some brokers may let you interact directly with the market makers online.
Pink Sheet and Over The Counter Bulletin Board - referred to as OTCBB - are the two major over the counter stock trading markets. So basically any stock traded through these markets and outside of the large markets are considered to be over the counter stocks.
Market makers have hold of the stocks and when the demand comes for them they then sell them to the brokers. Usually the broker would have received an order from a client. The price that the stock is sold for is usually negotiated between the broker and the market maker.
So to trade in over the counter stocks you will need to open an account with a broker so that the broker than then negotiate with a market maker on your behalf.
Over the counter stock trading is increasing in popularity with advancements in technology making them more readily available to trade. The number of companies within the OTC market is also growing as the companies are making their way up to the large stock exchanges. So now is a good time to be trading in over the counter stocks.
Sheryl Polomka is a successful stock market trader and understands the value of the stock market. To learn more about stock trading or to sign up free to her newsletter visit her site at Doubling Stock
Source: www.isnare.com
