OTC Stock - Stock Trader Glossary

OTC stocks are securities that are not listed on a major exchange like the New York Stock Exchange (NYSE) or the Nasdaq Stock Market. Instead, they are traded over-the-counter through a decentralized network of dealers. OTC markets are less regulated and less transparent than major exchanges, which means there is a higher risk involved in trading OTC stocks.

OTC stocks are typically smaller companies that do not meet the listing requirements of major exchanges. They may also be foreign companies that choose to list their shares on the OTC markets instead of a major exchange. OTC stocks are often referred to as penny stocks because they are priced at less than $5 per share.

Trading OTC stocks can be risky, as these companies may have limited information available to the public, making it difficult to accurately assess their financial health and future prospects. It is important for traders to do their due diligence and research these companies before investing in their stock.