OVER-THE-COUNTER MARKET
The "over-the-counter market" (OTC) is where most publicly available
company stocks are bought and sold. These stocks are not popular among big
investors. In the United States, there are around 25,000 companies trading OTC,
which is three times more than those on organized stock exchanges. Most of
these companies are small, and some don't provide the financial reports
required by stock exchanges. Note that calling NASDAQ trading "over-the-
counter" is no longer accurate.
In OTC trading, a brokerage firm helps find buyers and sellers for stocks
and agrees on a price that both parties are okay with. Alternatively, the
brokerage firm can buy or sell these stocks for itself. Some online services show
prices and trading info for OTC stocks, but since they don't trade often, it can be
tough to find someone to trade with, and the price might be very different from
the last trade. Companies that trade OTC usually have few shareholders and not
a lot of stock available. If a company wants to raise more money in the stock
market and attract more investors, it will try to get its stocks listed on a stock
exchange
Day trading
Day trading involves buying and selling financial assets like stocks or
currencies within a single day. The goal is to profit from small price changes,
sometimes holding assets for just minutes.
Here's how it works:
Day traders analyze market trends or specific companies to find
short-term opportunities.
They focus on highly tradable assets that can be easily bought and
sold.
Day traders aim to make quick profits by buying low and selling
high, often within minutes.
They trade in large volumes or make multiple trades during the day.
Day traders usually close all their trades by the end of the day to
avoid overnight market movements.
This is different from long-term investing, where assets are held for growth or
income over a longer period. Day trading is about exploiting short-term price
fluctuations for quick gains.
Potential Day Traders should be knowledgeable of the following:
Market data
The current trading information for each day-trading market. Rather than
using market data that is available free of charge but can be up to an hour old,
day traders pay a premium for access to real-time data. Day traders must be
able to trade on news or announcements quickly, so they need to watch the
market and stay close to their trading screens at all times.
Scalping
-A strategy in which traders hold their share or financial asset (known as
their "position") for just a few minutes or even seconds.
Margin trading
-A method of buying shares that involves the day trader borrowing a part
of the sum needed from the broker who is executing the transaction.
Bid-offer spread
-The difference between a price at which a share is sold, and that at which
it is bought.
Potential Day Traders should be aware that:
Day trading is a high risk occupation - Day traders typically suffer severe
losses in their first months to trading, and many never graduate to profit-
making status.
Day trading is a stressful- Day traders must watch the market nonstop
during the day, concentrating on dozens of fluctuating indicators in the
hope of spotting market trends.
Day trading is expensive - Day traders pay large sums in commissions, for
training, and for computers.