Investors Putting Nxt-ID, Inc. (NASDAQ:NXTD) Under the Microscope

The micro cap world has been buzzing about shares of Nxt-ID, Inc. (NASDAQ:NXTD) as its stock price changed 0.00%, hitting $1.84 after the completion of a recent trading session.

Though that’s the current price, let’s take a look at how the commodity has been performing recently.  Over the past year, Nxt-ID, Inc.’s stock was -33.09%.  Over the last seven days of the month, it was -12.80%, 16.46% over the three months, and  17.95% for the past half-year. 

Over the past fifty days, Nxt-ID, Inc. stock was -34.29% from the high and 18.71% apart from the low.  The fifty-two-Week High and Low are also noted here.  -57.99% (High), 52.05%, (Low).

OTC dealers use mass emails, instant messaging and, yes, the telephone, to put out their bid and ask quotes and negotiate trade prices.  This process is enhanced through electronic bulletin boards where the dealers post quotes.  This process of negotiating is known as “bilateral” trading due to the fact that only the two participants directly observe the quotes or trade.  Others in the market are not aware of the details to the trade, though some markets do post execution prices and other trade details after the fact.  Not everybody has access to the broker screens and not everybody in the market will be able to trade at that price.  Though the bilateral negotiation process sometimes is automated, the trade is not considered to be an exchange due to the fact that it is not open to all participants in an equal manner.

There are basically two dimensions to OTC markets.  The “customer” market, bilateral trading happens between dealers and customers, for example, hedge funds or individuals. Dealers will initiate deals with their customers through electronic messages known as “dealer-runs” where they list derivatives and securities and their prices.  The other dimension is the “interdealer” market, where dealers have direct phone lines to each other so that a trader can call a dealer for a quote, hang up with them and then call another dealer, and another, and so on, touching base with several dealers very quickly.  Investors can make multiple calls to dealers they trust to get a view of the market, though these customers cannot enter the dealer market.

Over-the-counter (OTC) markets don’t exist as a “place”, unlike traditional exchange markets.  OTC markets are less formal, though usually well-organized, networks of investors and traders orbiting around dealers.  In this market, dealers act as the market makers by setting ask prices at which they will buy or sell to other dealers.  This doesn’t mean that they quote the same prices to other dealers that they suggest to customers, and they do not always quote the same prices to every customer.  Dealers with an OTC security can pull out from the market at any time, causing liquidity to dry up and disrupting market activity.  OTC exchanges are much more liquid because every sell and buy order, as well as transaction prices are exposed for all to see.  Some exchanges also designate specific participants as “dedicated market makers”, requiring them to maintain steady bid and ask quotes throughout the entire trading day.  OTC markets are far less transparent than exchanges do and operate with fewer rules.

Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.

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