Make Your Money Work Well in Lesser-Known Market Corners
What you are buying when you buy OTC? You are not on the NYSE or Nasdaq here. You are in a quotation-driven market where dealers post bids and offers, and many issuers are tiny. The SEC uses the term penny stock for low priced securities that are generally under 5 dollars and not listed on a national exchange; brokers must give you special risk disclosures
Interpreting the OTC Market is a crucial component of discerning how to buy penny stocks. A majority of penny stocks aren’t listed on a stock market like NASDAQ or the NYSE but instead on the OTC market (or OTC securities market).
NASDAQ (National Association of Securities Dealers Automated Quotation) controls a little component of the over-the-counter market with the NASDAQ National Market (NNM), but this portion of the OTC Market doesn’t include penny stocks.
Pink OTC Markets, at one time called the National Quotation Bureau (NQB) and colloquially referred to as “Pink Sheets”, operates on the most active component of the OTC market. If you begin earnest and extended penny stock trading, you’ll at some point deal in Pink Sheets.