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Old 09-03-2012, 09:53 PM   Nav to Top  #1
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Default Understanding Small Cap Stocks Trading Over The Counter

Understanding Small Cap Stocks Trading Over The Counter

Small Cap, Penny, and Over-The-Counter stocks are considered by many to be the best way to an easy get rich return in the stock market. And although there is no doubt that many have become wealthy from investing in penny stocks or OTC stocks most of the time the investment will end with a total loss or maybe an addiction to day trading popular small cap penny stocks/OTC. The following article will take a look at OTC small cap stock arena and how the tiers have been segmented by OTCMarkets...the leader in listed Over The Counter Companies. Our goal at is to be fair, informative, and maybe give investors a better perspective on both the dangers and rewards of buying these stocks. Please remember that nothing compares to due diligence and an extensive amount of research on your part.

Unfortunately there are many, who are, rookie investors that fall in the trap of penny stock/small cap investing; in an attempt to make a quick buck. There are 100's if not 1000's of penny stock newsletters and small cap wizards who send newsletters, email blasts, and claim to return ridiculous gains in a matter of days. And although it's difficult to identify the intention of these newsletters we are sure that some are written out of one's own self interest. We as well at times are compensated to promote for companies and third parties; this list of compensated parties can be found on our disclaimer page. However, there are some that are legit and believe that what they are selling is true and has legitimate meaning behind the newsletter, and sometimes those writing the newsletters, or operating the sites, have been quite successful in trading penny or OTC stocks.

Most of the time an OTC or penny stock will trade with either no volume or the inverse: high level of volume and is easily manipulated because of its activity compared to its market cap. Penny stocks, micro cap stocks, or as sometimes referred to: small cap stocks, are often not listed on the NASDAQ, or any other major exchange, because they are unable to meet the listing requirements. A company that trades on the OTCMarkets trades with very few, if any, listing requirements but are required to provide financial statements to the SEC, or another banking regulator (depending on their tier.

The chances of buying a micro-cap stock and becoming a millionaire are slim to none. And from what we've seen over the last ten years most who attempt to purchase these stocks go about purchasing the stocks all wrong. Therefore we would like to share at least the basic market tier structure of small cap over the counter stocks, so you as an investor can research adequatley when considering purchasing high-risk penny/OTC/ or other micro-cap or small cap stocks.

The OTC market is made up of many different types of companies, ranging from OTCQX companies worthy of investor consideration to economically distressed companies to speculative shell companies.

Due to the wide range of OTC companies, OTC Markets Group developed the OTC Market Tiers to help bring increased clarity, transparency and disclosure to the OTC Market. All non-OTCQX OTC securities are assigned a Market Tier based on their reporting method (SEC Reporting, Alternative Reporting Standard) and disclosure category – Current, Limited or No Information.

Securities listed on OTCQX, the highest OTC Market Tier, are required to have Current disclosure in addition to the QX listing requirements. Securities within OTCQB Market Tier must be SEC, Bank or Insurance reporting and must be Current in their disclosure.
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micro cap companies, micro cap stocks, nanocaps, otc stock, over the counter, penny stock, small cap stock

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