## Want to enter the stock market but don't understand the listing and OTC markets? A chart clarifies the investment differences among the three major markets

Beginner stock traders are often troubled by this question: **What exactly is the difference between listing, OTC, and emerging markets?** Choosing the wrong market could mean the difference between steady profit and significant loss.

### Quick judgment: Which market are you suited to invest in?

**If you are a beginner** → Listing stocks are the first choice
- High trading volume, good liquidity, can buy and sell anytime
- Relatively mild volatility, suitable for practice

**If you have some experience and want to find growth stocks** → OTC market can be considered
- More diverse themes, larger potential for stock price increases
- But risks also increase

**If you are a high-risk hunter** → Emerging stocks might be worth researching
- Unlimited potential, but can also collapse overnight
- Not recommended to test with large capital

### What exactly are the three markets?

**Listing (TWSE / NYSE / NASDAQ)**

In Taiwan, listing refers to being listed on the "Taiwan Stock Exchange"; in the US, it is divided into the New York Stock Exchange and NASDAQ.

Listed companies are usually industry leaders—like TSMC, Delta Electronics, MediaTek. To protect investors, the Securities and Exchange Commission enforces strict review processes for these companies. After listing, companies must disclose quarterly financial reports; failure to meet standards can lead to delisting.

**Core features:**
- Strong stock liquidity, fast buying and selling
- Price fluctuation limits exist (Taiwan stocks ±10%), volatility is controlled
- Suitable for investors seeking steady gains

**OTC (TPEx / OTC Market)**

Unlike the centralized matching of listed stocks on exchanges, OTC stocks are traded by broker-dealers holding inventories. This market not only trades stocks but also bonds, derivatives, cryptocurrencies, and other financial products.

In the US, OTC is divided into three tiers: Best Market (OTCQX), Venture Market (OTCQB), Pink Market (PINK). Regulatory oversight decreases in that order—Pink Market only requires submitting a form to list, thus carrying the highest risk.

OTC companies are often growth-oriented enterprises, mid-sized firms, or overseas companies already listed elsewhere but unwilling to list again in US stocks (e.g., Volkswagen).

**Core features:**
- Low trading volume, large bid-ask spreads
- No or loose price fluctuation limits
- Less financial transparency than listed companies
- Highly volatile but with significant opportunities

**Emerging Stock Board (興櫃)**

This is the "preparatory team" before a company jumps to OTC. Startups, biotech, medical devices, or teams with hot topics often operate here.

**Core features:**
- No fluctuation limits; can hit limit-up or limit-down instantly
- Extremely low trading volume, may not sell easily
- Least transparent information, only negotiable transactions
- Highest risk, but also the greatest opportunity

### Listing vs OTC vs Emerging Stock Board: Decision Comparison Table

| Aspect | Listing | OTC | Emerging Stock Board |
|--------|---------|-----|---------------------|
| Company Type | Mature large enterprises | Growth, mid-sized companies | Startups, early-stage companies |
| Regulation Strictness | Strictest | Moderate | Almost none |
| Profitability Requirements | High | Medium | None |
| Financial Transparency | High | Moderate | Low |
| Liquidity | High | Moderate to high | Lowest |
| Price Fluctuation | Smallest | Moderate | Unlimited (max) |
| Trading Speed | Fast | Fast | Slow (negotiated) |
| Suitable Investors | Beginners, conservative | Mid-level, growth investors | High risk tolerance |

### How to buy these three types of stocks?

**Listing stocks:** Opening an account is easiest. In Taiwan, just open an account with a securities firm; in US stocks, via overseas broker or through a U.S. depository. Note that US trading hours are in the evening in Taiwan due to time zone differences.

**OTC stocks:** For Taiwan stocks, find a broker; for US OTC stocks, also open an account with an overseas broker. Most overseas brokers support both listing and OTC trading.

**Emerging stocks:** The most complex. Must confirm the broker has "Emerging Stock Board trading qualification," and activate it in person or online. Due to high risk, sign a risk warning form. Orders can only be placed with "spot stocks," no margin or day trading, must trade in whole lots (1,000 shares). Negotiated trading, so execution is not guaranteed.

### What are the pros and cons of investing in these stocks?

**Advantages of investing in listing stocks:**
- High return potential: S&P 500’s average return over nearly 30 years is about 10%, far exceeding bank deposits or bonds
- Passive income: Many listed companies pay dividends regularly
- Hedge against inflation: Stock market returns often surpass inflation rates

**Risks of investing in listing stocks:**
- Market volatility can reduce capital by over 10% in the short term
- Requires time to research individual stocks’ fundamentals and technicals

**Advantages of OTC stocks:**
- Wide selection: Many internationally renowned companies trade only on OTC
- Low share price: A single share costs only a few dollars, with larger growth potential

**Risks of OTC stocks:**
- Loose regulation, less disclosure (especially Pink Market), high risk
- Low trading volume, may face "hard to sell" situations
- Sensitive to macro data, reacts strongly to market news

### Three essential investment tips for beginners

**Step 1: Assess your investable funds**

Calculate your income, expenses, debts, and savings first, then decide how much money to invest. Remember—investment is a long-term wealth-building tool, not a gamble to get rich quick. Don’t put all your assets into it.

**Step 2: Master basic knowledge**

Read financial reports, attend earnings calls, study analyst reports. The more homework you do, the more accurate your decisions will be.

**Step 3: Set clear goals**

Set monthly and yearly financial goals to avoid being overwhelmed by daily news and short-term fluctuations. Having goals gives you direction, and market noise will naturally fade away.

**Conclusion:** Listing stocks are suitable for steady accumulation, OTC stocks for seeking growth, and emerging stocks are for experts. Choose the market that best matches your risk tolerance and experience—this is the first step to winning.