Over-the-counter (OTC) shares trade directly between parties through dealer networks rather than on a major exchange. They are often companies too small, too new or unwilling to meet full listing requirements.
Prices are quoted by dealers, not set in a central order book.
OTC companies are often at an early stage, so the range of outcomes is wide. A share can multiply in value, or become worthless. Because information is limited, the risk is harder to judge, not just larger.
OTC markets are organised into tiers by how much a company discloses. Upper tiers require audited financials and regular reports. The lowest tiers may have little current information at all.
The lower the tier, the more you are trading on trust.
Some well-known companies started out trading OTC before moving to a major exchange. That story is real, but rare. For every success, many OTC companies never grow.
Finding the exceptions takes research into the business, not tips or hype.
With few buyers and sellers, OTC shares can be easy to buy and hard to sell. If you need to exit, you may have to accept a much lower price, or wait days for a buyer.
Before trading anything off-exchange, check it properly.
