The Basics of the Over-The-Counter Stock Market
A stock market, equities market, or share exchange is an association of buyers and sellers of shares, that collectively represent ownership interests in organizations; these can include publicly traded securities on a regulated exchange. The buying and selling of such securities take place at a pre-set price on a regular basis and can be bought or sold through a broker or online at any time. There are many types of exchanges, some of which are listed below. These include the over-the-counter market, Over-the-Counter Bulletin Board (OTCBB) market and Pink Sheet market.
The OTCBB is a relatively new type of stock market. It was developed in the early nineties and since has grown to encompass a number of different nations and currencies. Many new names have been given to the various exchanges, but they all basically function on the same basic principle. Members of the exchange trade stocks that are listed on the OTCBB for a pre-set price. Investors in these stocks may buy and sell as they see fit during the trading session.
A public market provides immediate liquidity, allowing small investors to quickly and easily access shares on the business they are interested in. Because of this accessibility, it has often been called the world’s largest stock market. Public equities are available in almost every type of industry, with everything from oil and gas to computer equipment and publicly held equity stocks accounting for most of the market value of publicly traded companies.
The Over-the-Counter Market (OTC) is a large and constantly expanding market consisting of over-the-counter options, penny stocks and other types of securities that are traded between brokers and individuals on an exchange. With so many choices, this is one of the best ways for new investors to get into the stock market. Options, a kind of investment vehicle where the initial financial risk is low, allow the potential investor to gain some financial security without putting up any initial capital. When the value of the option is less than the initial investment, an investor makes a profit.
Shares on the Over-the-Counter Market are traded on futures exchanges and are not traded on major exchanges such as the New York Stock Exchange or the NASDAQ. This aspect of the market allows buyers and sellers to skirt the costs of trading exchanges by trading shares without actually having to purchase the actual shares. This has made it popular with younger investors who do not want to commit to a large amount of money upfront and are happy to ride the stock market until the time is right. However, many savvy investors use the OTC market as their primary means of trading, as well as shorting and trading stocks. These techniques have earned millions for those who can successfully apply them.
While the over-the-counter stock market may seem appealing to new investors and veterans alike, both must be wary of the potential dangers. Brokers and dealers can be a double-edged sword, as they often work in tandem with investment banks to orchestrate trades and provide advice. Because of this, it is very important that you work with only the most trustworthy brokerage firms and dealers.