A Complete Guide To Crypto OTC Trading

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By Kaleem Ullah

When buying and selling cryptocurrency OTC or over the counter, things can get tricky if you don’t have the right information available. In this guide to crypto OTC trading, you’ll learn everything from how OTC works to the various things you need to do to keep everything compliant and safe. Whether you’re just getting started with your first crypto purchase or are an experienced pro looking to expand your portfolio, you’ll want to read this comprehensive guide before making your next move. 

How to Start

It’s not too late to start trading crypto, but if you want to do it right, you need to be ready with your strategy. That starts with figuring out which type of trading platform is best for you. There are three main types of trading platforms: over-the-counter (OTC), decentralized exchanges, and centralized exchanges. 

Decentralized exchanges don’t hold any of your funds on their servers. Rather than storing coins in a wallet or account, they use smart contracts that make sure trades happen directly between traders without any intermediary taking a fee. 

Centralized exchanges typically take a percentage from each trade as a fee and allow more options for withdrawal than decentralized ones. Zerocap is among the trading firms that offer traders an option where they can invest by contributing capital upfront rather than making a transaction at regular intervals.

What is OTC Trading?

OTC trading is a type of trading that typically happens on the phone or in person, as opposed to through electronic systems. Companies use OTC trading for many reasons: to trade larger blocks of securities outside the public eye, for help with valuation or hedging and risk management, and sometimes just because it’s more cost-effective than using established exchanges. 

OTC traders can be from banks looking to sell large quantities of stock they hold onto big investors who want to trade shares in smaller companies. One thing that all parties involved in an OTC trade should have in common is deep knowledge of the security and market they’re buying/selling in.

What Types of Orders Can Be Placed?

You can place three orders on an over-the-counter (OTC) trading platform: a limit order, a market order, and a stop-loss. A limit order is the most common type of order you’ll use on an OTC trading platform. A limit order will buy or sell at the best price possible at that moment to meet your criteria. 

A market order is an instant buy or sell of your desired cryptocurrency at whatever price it is currently being sold for on the exchange. On the other hand, a stop-loss order could be used as a safeguard against big losses. It lets you set a minimum amount of money that must be kept invested in any given trade. If your investment falls below that amount due to volatility or dramatic changes in value, it triggers a sale automatically, not losing all of your investment money.

How Are Coins Traded Over The Counter?

The trading of coins in the crypto world is typically done over-the-counter (OTC), which means that traders will find a direct buyer or seller and negotiate terms with one another. The transactions are not centralized and are usually handled through private messages on forums or by email. There are no set prices for any coin, and prices are often ad hoc between individual buyers and sellers. Another difference is that exchanges require you to have your identity verified before you can place orders. In contrast, OTC trading does not require identification because it is privately negotiated between two people.

Who Should Use an OTC Exchange?

OTC trading is a good option if you’re looking to trade large amounts of cryptocurrency that are too small for a major exchange. It can also be used if you’re worried about security on an exchange or need to access cryptocurrency that isn’t currently available on the market.

To Conclude

OTC trading is a great way to buy and sell crypto without having to go through the hustle of setting up accounts, logging in, and waiting for the verification process. Not only does it give you more flexibility in terms of what time of day you trade, but it also allows you to avoid the high fees charged by exchanges.