The word OTC trading is the abbreviation of the word Over-The-Counter. Generally, transactions carried out outside the exchange for financial markets are called OTC.
Apart from financial markets, the word OTC can also be encountered in the pharmaceutical industry. Medicines that can be taken without a prescription are called OTC drugs.
In OTC trading, in off-exchange transactions, the buyer and seller communicate directly and carry out their trade.
OTC trading is a transaction made directly interpersonally, not through standardized platforms in the exchange environment. You can buy stocks via OTC trading. OTC allows you to sell or buy financial instruments such as securities and bonds. You can trade OTC through some brokerage firms outside the stock exchange.
Another preferred OTC trading tool is currency trading. You can trade or invest in different currencies through the Forex market.
Transactions can occur through financial institutions, interpersonal, or banks.
Choosing Jetonbank means that you will always have privileges that will take you one step further in your transactions. You can also carry out your commercial transactions through financial derivatives.
These may be swaps and some commercial options. Another operation you can do in OTC trading is digital asset OTC trading.
You can also buy and sell digital assets in an OTC trading environment.
What is OTC trading?
OTC trading refers to trades that take place on platforms other than exchanges, or interpersonally. It is also called over-the-counter trading. OTC trading is more flexible outside the exchange environment and is based on contracts where the buyer and seller can offer their own trading terms rather than standard contracts.
In OTC trading, parties can trade with lower amounts for their own needs, regardless of the lot amount on the exchange.
While OTC allows trading to be faster and more flexible, this can bring with it some risks. The price change in the market may increase and this is among the risks we mentioned.
Since transactions are made manually in OTC trading, you need to follow the transactions extra. When trading OTC, you should consider all these risks and make your contract with strategies that will manage your risks.
Direct communication between the buyer and seller also brings with it certain options that distinguish OTC trading from stock market trading.
How to Do OTC Trading?
OTC trading requires interpersonal communication. Buyers or sellers communicate directly to execute their trade. This communication can take place by phone, e-mail, or some commercial platforms. Jetonbank is always at your service for these transactions.
The buyer and seller can determine the price, quantity, and terms of the contract in line with their own interests. Parties can negotiate by taking into account the past market and future value of the product.
A contract is prepared stating the rights and commitments of the parties. The contract is signed and during this process, the parties must closely observe their financial situation and the course of the other party and create risk management plans in case of any risk situation.
The section "Methods to be applied in case of any dispute" to be added to the contract are the articles that you can apply in case of irregularities in the contract and are very important.
Getting expert advice from a financial advisor or support from legal experts for your OTC trading will always be beneficial in terms of your rights.
How OTC Trading Beneficial for Business?
To talk about the advantages of OTC trading to businesses; This system, which directs the buyer and seller to make a mutual agreement directly, allows the parties to easily customize transactions according to their wishes and needs without being subject to strict rules determined beforehand.
It also provides the opportunity to buy and sell several assets that are not traded on exchanges. Here we can talk about offering a wider range of products to businesses.
Additionally, since there are no procedures like in the stock market, the transaction speed in OTC trading is much higher, and it can provide businesses with more privacy.
Finally, it is necessary to mention the originality in risk management in this case, where there are no rules like in the stock market and the parties start trading after mutual agreements.
Changes, updates and improvements may be made to the risk factors mutually agreed upon and deemed appropriate by the parties. This allows businesses to manage risks more specifically.
What is an Example of an OTC Transaction?
In general, OTC transactions are trades that exclude centralized exchange supervision or an intermediary. In other words, OTC trades are carried out between buyer and seller.
An example of these kinds of transactions might be digital asset trading as it occurs when the buyer and seller agree on a certain price through negotiation.
OTC transactions are more informal and flexible than any other trading. While executing these transactions, it is better to be aware of the risks that they involve as they do not have any intermediary firms.
What is an OTC Trading Platform?
It is the general name of platforms that enable buying and selling of assets such as digital assets, where buyers and sellers directly deal with each other.
OTC trading platforms, which have a wide product range, are known for offering more flexible solutions to their users.
To give an example; Kraken, which can be considered a digital asset OTC platform, Genesis Global Trading, which is known for its suitability for large volume transactions and suitable for institutional investors, and Jetonbank are among the notable names of the sector. It is possible to increase the number of examples.
Which Platform is the Best for OTC Trading?
When talking about OTC platforms, calling it the best would be a bit of an understatement. Because the best term may vary depending on users' preferences and the assets they plan to trade. To put it simply, it is personal.
However, there are a few factors required to be among the best. These are; the general transaction capacity of the platform you choose to use, security measures, user-friendly interface that provides practical use, breadth of product range, customer support, and positive feedback from users play a key role in determining the best platform.
