OVER THE COUNTER

Over the counter is the method of trading use to do trading of stock, bonds, derivatives and commodities. This trading takes place directly between the two parties. It is different from that of exchange trading, which takes place through the facilities provides by the stock exchange like future exchanges.
Online stock trading which is done out of the stock exchange and stock is also issued out of the exchange, known as over the counter. In US OTC trading in online stock trades is done through market makers. Those market makers who make market in OTCBB and Pink sheets by using inter dealer quotation systems.
Normally OTC stocks are not listed on the stock exchange of online stock trades. But the stock listed in online stock trading exchanges, can be used for OTC trading through third party.
In OTC those stock which are quoted through OTCBB need to be SEC reported but the other stocks quoted by the support of pink sheet does not require any reporting in online stock trades.
A contract in which two parties decide how their online stock trading will take place in future in online stock trades market, is known as OTC contract. This trading is done from the investment bank to the customer directly. This trading is done through land lines or through computer using internet.
OTC trading offers high rate of profit but it contain mush risks also. A trader of OTC online stock trades should be prepared for the loss of his all investment. Before doing this kind of online stock trading a trader must have all the necessary information about the company, its financial conditions, its management, history of the company’s operational work and all other required details.
A fraud namely, pumps and dump is mostly occurring in OTC. This fraud is done through emails and telemarketing in which a supposed stock is promoted in front of the client as a hot stock.