Over The Counter Stocks - What You Need To Know About OTC Penny Stocks

Penny stocks aren't traded on traditional stock exchanges. Instead they are traded in the over the counter or OTC market. The OTC market comprises of the NNM or NASDAQ National Market. This part of the National Association of Securities Dealers Automated Quotation (NASDAQ) system doesn't list any penny shares.

But, there are penny stocks that are listed on the NASDAQ. These stocks will meet the listing requirements for the NASDAQ exchange. The advantage here is that the prices of these stocks will also be available in newspapers making it less of struggle to get the quotes from some other source.

The other part of the Over The Counter market is the NQB service. The NQB or the National Quotation Bureau service is known as Pink Sheets. The name came about because various price-related information about the shares of stock is printed on sheets of pink paper. These sheets aren't easily accessible by small investors. They will have to rely on their brokers for getting more information on prices. The brokers in turn will call the market makers to get the information.

The market maker is the broker-dealer who 'make' the market. They are available to transact i.e. buy or sell 100 shares of stock in a a given company. Through these middlemen, there is some level of liquidity by proposing prices whenever a buy or sell order is being initiated. The more market makers that exist the more likely they are going to compete against each other on price. This gives you the investor the best opportunity for getting a good price. How do you find the market makers? Their information is mentioned in the pink sheets next to the stock prices.

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