Over the Counter Markets – The Basics

Most people have heard of the New York Stock Exchange and the NASDAQ, but even some investors shy away from other types of trading.  While countless people have made their fortunes trading on the major stock markets, there are plenty of other investment options out there that hold the potential to deliver very real financial rewards.  Of course, those rewards aren’t without risks, but if you learn a bit more about using over the counter markets then there’s a good chance you’ll at least want to dip your toes into their waters once or twice.  It could deliver a very real profit to you if you handle it with respect.

Basically, over the counter markets are those that sell shares in companies that aren’t listed on the major exchanges.  OTC markets – often called pink sheets – aren’t even officially considered to be exchanges for just that reason.  These shares aren’t on major exchanges for one of two main reasons.  In most cases they either don’t meet the minimum requirements to be listed or don’t file their information through the Securities Exchange Commission.  This means that the companies themselves are less well-known and that far less information about their business structure, profits, and future is known.

Many investors stay away from over the counter markets because of the lack of filing and info on the companies.  This results in greater risks since it is much more difficult to determine if a company is selling shares fraudulently or whether or not it is more likely to be a failure in the long term.  However, investing in over the counter commodities could result in major benefits since the shares will be very cheap initially.  If the company finds major success, the shares you bought for next to nothing could become highly valuable and add significant profit margins to your bank account.

The real key to success with over the counter investing is research.  Since little information will actually be available to you, you’ll need to take the time to figure out if you’re placing your money in a reputable business yourself.  This will involve a good bit of research on your part, and it can be a time consuming affair.  However, many investors have made millions off of smart investing in pink sheets, so taking the time to consider it could pay off big.  There are huge risks, to be sure, but huge rewards as well.

About Richard Wilson