Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.
What is an OTC Market?
An OTC (over the counter) Market, is a decentralized market where assets, including some currencies, that are not traded on centralized stock markets can be traded. Because OTC markets are not centralized, and not regulated by any governmental authority, they will often be less transparent than centralized markets, and therefore riskier.
How does one use an OTC Market?
Trading on an OTC market is similar to trading on a centralized market. Traders find a broker, who serves as the middleman between them and fellow dealers, as well as with corporations and businesses that are not being traded on centralized stock exchanges. One of the primary differences between an OTC market and an exchange market is that on an OTC market, the brokers have more flexibility on the buy and sell prices that they set. As a result, a broker may quote one price to one client, and a different price to another, and there may be differences in the Bid-Ask spread.