ShmoopTube

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finance a la shmoop what is over the counter or OTC alright buy drugs LVM

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non-prescription kind yeah those nyquil tylenol preparation-h well then you buy [Doctor filling out prescription]

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them over-the-counter prescription drugs yeah those are different much more

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highly inspected regulated structured and stocks work the same way when you

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trade over-the-counter you're generally trading within a network of other

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dealers all trading stocks think of it like everyone on Facebook had a trading [Facebook posts appear]

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account nothing really is supervised door regulated or controlled it's just

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the transaction happening among two strangers passing in the night [People walking around with smartphones]

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exchanging glances get a fair deal on this trade well on the exchanges Amazon

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was offered for fifteen hundred two dollars a share but on the OTC deck

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network while it was offered at 1507 maybe you'll have overpaid five bucks a [Amazon share prices appear]

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share for Amazon if you buy it here rather than on NASDAQ which is a normal

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securities exchange well stocks bonds commodities derivatives they all trade

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OTC and also on exchanges so why are there both methods of trading in the

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first place well demand if everybody was happy with the trades they made from

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9:30 to four New York time well then there wouldn't be a whole lot of demand [Stocks transferring from wall street]

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for trading outside of those hours and in other places but there is so there is

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an OTC trading accommodates after-hours trading as well which can be a really

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big deal when a company announces earnings at 4:30 p.m. New York time and [Newspaper of record earnings for company appears]

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the street either loves or hates the numbers that the companies printed the

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stock can move a lot in a short period so a lot of investors are happy to be

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able to either dump or scarf up positions in whatever calm at 4:32 p.m.

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after the numbers have been published not wanting to wait the dozen in change [Clock rapidly ticks forward]

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hours until the market opens again in the morning the basic idea behind OTC

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trading is that the world of OTC is kind of the wild wild west of stock exchanges

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unlike trading on the NYSE where companies have to meet very high

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standards to be accepted for trading on the exchange qualify for OTC trading

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while companies basically just have to spell their name properly fill out a few [Person signing a document]

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forms and feel that belonging thing and even then

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well you know there's a lot of flexibility

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