The next 2 exchanges are the OTC Markets and the Foreign Exchange markets. The OTC stands for over-the-counter and typically trade unlisted stock which just means that its stocks that are not traded on the regular exchanges such as The NYSE or The NASDAQ. OTC is different from other major exchanges, there is no central exchange you have to buy stock directly from a broker or “Market Maker”. It is also harder to buy OTC stocks because not all online brokers are willing to work with the OTC Markets. You can view OTC stock prices on the OTCBB (Over-the-counter Bulletin Board)
Risk behind the OTC Markets
Stocks traded on the OTC Markets come with A LOT of risk, they are smaller companies which cannot be listed on major exchanges which means they could go Bankrupt.. FAST! leaving you hopeless with all your money GONE. OTC Markets are for more experienced traders because of how high the volatility is or how quickly the stock price can change. BE CAREFUL TRADING OTC STOCKS, YOU CAN LOSE A LOT OF MONEY!!! on top of how volatile the stock is and the fact that they could go bankrupt any second, there is still more risk involved. OTC traded stocks are small companies like i have stated before but since there so small it is hard to collect any good news from such company, the last thing about OTC traded stocks is that not many people buy and sell OTC stocks so if you do buy a stock, when the time comes to sell you might not be able to because no one will be there to buy it. Remember whenever someone sells a stock someone has to be there to buy it, or it will never get sold. There is a lot of risk in the OTC markets, lets stay away from there for now.
*The OTCBB is owned and operated by NASDAQ, Although OTCBB stocks are NOT listed on NASDAQ
The next part of the OTC Markets are whats called the “pink sheets”, the pink sheets are the unregulated side of the OTC, it is very easy for a company to get listed on the pink sheets. In order to get listed on the pink sheets a company would simply have to fill out a form (Form 211, which just required some financial information. Its that easy!
Only very small companies or companies that have been kicked off of other exchanges for not following rules are traded here on the pink sheets.
The pink sheets are very very risky! the only thing there is hope, hope that one of the companies you pick and buy for pennies a share hit it big and skyrocket.
In the Foreign Exchange Market it makes it possible for Americans to buy and sell shares of stock in another countries stock market. Certain online brokers allow you to do international trading.
One thing you have to do to be able to buy shares of another countries stock market is you have to exchange your money for the countries currency, you have to take into account the exchange rate which will cost you money and cause you to make less money back on your trades. The next thing you have to do is account for the time difference, you can only buy and sell stock when the markets are open during the countries hours. Which means that you will be up very late or very early on nights in order to trade foreign exchange.
I personally don’t see a point in trading on the foreign exchange unless you are more professional and skilled, foreign stock markets act differently from the US. I would stay away from here until much much later.
The OTC Markets and The Foreign Exchange Markets are both important and also both have the potential to have great upside, if you can trade it correctly which is hard. I recommend that you wait and don’t trade on the OTC Markets or Foreign Exchange markets until you are skilled and comfortable with it. YOU CAN LOSE MONEY FAST!