OTC – Over The Counter
What is OTC trading?
OTC stands for over-the-counter and is often referred to as off-exchange trading. OTC trading is not specific to crypto. It is an essential feature of most tradable markets. Usually, an agent or broker is used to bring buyers and sellers together. This differs from on-exchange trading, where many buyers and sellers can post their own price levels on an order book and wait for an opposing buyer/seller to trade with them at their posted price.
OTC vs exchange trading
For most crypto traders, trading on a transparent reliable exchange like Independent Reserve will satisfy all trading needs. However, for large volume block trades (~$AUD 200,000+), executing all at once on an exchange is likely to have a negative impact on the price the order gets filled at. This is what’s known as slippage, and it can be very costly for wholesale traders.
Advantage of OTC trading
One key advantage of using a premium OTC service such as IR OTC is that market slippage is kept to a minimum. This means, the gap between the cheapest price and the actual price for the volume you want to trade is minimised. The larger the trade size, the more you will save on slippage costs when executing via OTC.
Another advantage is privacy. Since OTC orders are not visible or reported to the market, there is less chance your trade will signal the market and move prices away from you before you are filled.
OTC desks provide access to deep pools of liquidity by tapping into their network of institutional crypto buyers and sellers, such as miners, ICO advisories, family offices and investment funds.
Whilst all trades are confidential, professional brokers can provide reporting and market colour, which institutional traders often find valuable when making trading decisions.
It is important to note that IR does not provide financial advice. All readers and clients are strongly encouraged to conduct their own personal research.
Independent Reserve offers an in-house OTC service with dedicated traders for large scale orders. To get in touch please fill in the below form and we will contact you ASAP.