What are OTC stocks exactly?

Over-The-Counter (OTC) stocks are securities that are not listed on an official and centralized major exchange, like the New York Stock Exchange. This means you will need to acquire these penny stocks through a dealer network.

OTC securities are generally small companies, although there are plenty of exceptions to the rule. They also have low trading volumes and are highly illiquid, making them vulnerable to pump-and-dump schemes.

An OTC stock can be safe to buy if you proceed with caution. It is important to refrain from pouring too much money into these types of investments. They are appropriate for novice investors to get a feel for the broader financial markets. But, for the most part, do not expect to retire off of an OTC security.