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Over-The-Counter (OTC) Investing


Here is yet another method of investment that was widely accepted and utilized long before the inception of stock exchanges. Allow me to introduce the paradigm of investing over the counter. During the earlier times, when computers were still expensive and unreliable (for the minds of the commoners), people used to exercise this form of investment. The proliferation of the internet and suitable networking technologies enabled the stock exchanges to grow significantly. Even in the face of extinction, over the counter investing managed to keep itself afloat thanks to the existing and alternative forms of financial securities.

The absence of a centralized stock exchange that monitors and streamlines the entire share / stock trading activities is one of the marked differences of over the counter trading. The same activities are conducted via a separate network of dealers that might or might not be affiliated with a stock exchange in the country. Telephones and computers are widely utilized to execute the deals. Now, do not rush into conclusions - the nonexistence of a stock exchange does not necessarily mean that the market deals with unconventional securities. Just like their elder sibling, the traders and stockbrokers engage in the buying and selling of company stocks, shares, bonds and commodities.

Humans are inherently programmed to be suspicious. I am sure that some of you might be wondering - why do companies opt for such "sinister" practices? In order to alleviate the doubts, allow me to cite the actual reason - not all companies will be able to satisfy the guidelines mentioned by the stock exchanges. It is, in fact, very difficult to get a company listed at a stock exchange and maintain its footing at the same exchange. In order to avoid all the associated headaches, these companies might prefer to indulge in over the counter investing paradigms.

Over the counter bulletin boards and pink sheets are widely employed to conduct the buying and selling of shares in an unproblematic manner. A quick look at the over the counter market statistics will prove that substantial levels of transactions are conducted daily. In the United States, the government, municipal and corporate issued bonds are widely traded over the counters. The traders will derive their profits by purchasing bonds for lower prices and waiting for the average market price to rise. Companies will also look out for bulk discounts, which can be availed by trading in the over the counter markets only.

A good understanding of over the counter trading practices is required in order to gain the maximum returns. Penny stock investing and over the counter bulletin boards would enable a novice investor to learn the basics of this form of trading. Over the contracts are much preferred these days by the novice traders because of the low risks associated with them. Contracts are akin to agreements, which will be settled at a future date. Some of the investing companies will offer training for effective over the counter trading practices. All the best and please keep us updated with your relevant findings.

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