Over the counter stocks can be monitored on the OTCBB or OTC Markets. These agencies report transactions that are not reflected at the major exchanges for listed securities. OTC stocks might be more volatile than stocks listed on the major exchanges, and it can be more difficult to gather news and reports on OTC stocks. That being said, OTC stocks trade in the same manner as those listed on the New York Stock Exchange or the Nasdaq, meaning that they can be bought and sold through a variety of online brokerage firms.
If you are interested in trading OTC stocks, you can do so using a variety of popular online brokerage firms. Keep in mind, however, that these markets may be somewhat more volatile than the major exchanges.
Choose a Brokerage Company
If you currently have a brokerage account, but the commissions seem high or the broker doesn’t offer online trading, you might want to open a new account to sell your OTC stock. Watch for annual fees or inactivity fees as well as features like trading platform options and research tools. Brokerage site education centers can be useful and save calls to customer service.
Deposit or Transfer the Stock
If you have a physical stock certificate, you will need to deposit this into your brokerage account so it can be held in street name, instead of registered to you specifically, so it can be traded online. Contact your broker for details regarding how he wants the certificate signed and if he requires a Medallion Signature Guarantee.
If you own the stock in a different account from where you would like to do your trading, you will need to fill out transfer paperwork at the new brokerage company and have the shares moved.
Research the Stock
Find out what the OTC stock's current market value is so you can place your trade at the right priced limit order, or know what to expect if you sell it at the market. If the company is about to release an earnings report, it could affect the trading price. Check for recent news articles regarding the company specifically or its industry. Research quotes to determine if the security follows any stock price fluctuation patterns.
Place the Trade
OTC stocks can be traded the same way listed stocks are traded. You can sell your shares at the market or for a limit, by setting your own price to execute if the stock moves to that price. If you have a margin account with short approval you can sell the shares short and buy them back later, hopefully for less than you shorted them. You can also sell options, which allow others to buy your shares at a specific price by a specific date.