Start your OTC Stock Research Here

What is an OTC Stock? An OTC (over-the-counter) stock is a financial instrument like bonds, derivatives and commodities. Generally, these stocks are not listed on any major stock exchanges like the New York Stock Exchange or the NASDAQ, but are traded off-exchange or over the counter, with broker-dealers setting the buy-sell prices.

OTC stocks are listed on the OTC Bulletin Board and the Pink Sheets where quote information is updated daily. Because there is usually little or no financial information easily available to the general public, many online companies specializing in profiling these micro-cap stocks offer OTC Stock Alerts. The OTC Stock Alerts can be in the form of a newsletter, a discussion on an online stock room or e-mails delivered to your inbox. Many of the companies offer free market analysis, or claim to have news about hot companies issuing stocks with the highest potential gains.

Different companies showcase different micro-cap stocks, so there is no shortage of stocks on the market available for your consideration. However when you receive an OTC Stock Alert, you should still be responsible for your own due diligence. If you have a personal financial advisor— and it is wise to seek the services of one if you do not— his or her opinion and expert knowledge of this volatile market should be sought before making any investment, however small.

Because the OTC stocks are fairly inexpensive and trade under $5.00, it makes the market available to a wide range of investors. However many factors should be considered if you are thinking of investing in this market. Many of the stocks are issued by new companies with a small cap, where financial information is limited or in some cases nonexistent, even on OTC Stock Alerts. The Financial Industry Regulatory Authority has no jurisdiction over these equities and the only requirement of the SEC is that you are given a Schedule 15G before committing to purchasing OTC stock.

The hope of every investor is that he or she will find a company that beats the odds and does extremely well, rewarding him or her with a generous return on the investment. Even though the potential for a high rate of return on an investment is possible, a significant loss is just as likely. OTC Stock Alerts can be full of information and misinformation, so being a prudent investor is important. Also, knowing the level of risk with which you are comfortable should be a factor in deciding if this volatile market is right for you.

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