What Are OTC Pink Sheet Stocks?

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If you’re in the early stages of learning about stocks, you’re likely also learning the ropes of stock markets themselves. After all, if you want to start investing in these financial products, you need to know where you can trade them. Stocks are traded on exchanges — some of the most familiar of these being the big names like the New York Stock Exchange (NYSE), NASDAQ and the Chicago Stock Exchange.

But not all stocks are traded on these famed exchanges; there are special types of stocks you’ll have to seek out elsewhere, some of which are called OTC pink sheets. If you’ve heard of these stocks and are curious about investing in them, it’s important to know a few key things first. We'll fill you in on what OTC pink sheet stocks are, what kinds of characteristics they have, and the pros and cons of trading them — the must-know essentials to understand before you make the leap toward investing in these unique stocks.