What is the OTC?

penny stocks

Stocks trading in the OTC Markets usually see Wild Swings bringing many traders Huge Profits

Often considered the “Wild West” of the Stock Market, the OTC or OTCBB (Over-the-Counter Bulletin Boards) is a regulated quotation service that displays real time quotes, last sale prices, and volume information in over the counter equity securities. An OTC security is any stock that does not trade on Nasdaq or a national securities exchange. OTCBB stocks include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts and Direct Participation Programs.

Similar to the OTCBB Exchange are the Pink Sheets. Many companies are often found to be listed on both exchanges. Companies on the Pink Sheets are not required to meet minimum requirements or file with the SEC. So-named because they were actually printed on pink paper, the Pink Sheets started out as a daily quote service provided by the National Quotation Bureau. Typically, companies are on the Pink Sheets because either they are too small to be listed on a national exchange or they do not wish to make their budgets and accounting statements public. To avoid having to file with the SEC,

Stocks that trade on the OTC and Pink Sheets often come with a high degree of volatility and are usually Penny Stocks.

penny stock

Penny Stocks usually outperform it's peers

What are Penny Stocks?
A stock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure.

There is no doubt that many seasoned traders have made substantial profits by trading Penny Stocks on the OTC markets. Due to their low liquidity, Penny Stocks have the potential to make gains of 100% to over 1000% – sometimes in the same trading session!

This is why millions of investors flock to the OTC Markets for gains that just can not be found on the major exchanges.

Analyzing and predicting this huge rallies and swings can be difficult without the right set of tools and knowledge.  For more information and tips on trading the OTC Markets, please visit our Trading School.