What is OTC trading?
OTC trading is done directly between two parties. An OTC intermediate either activates the trade with liquidity or finds some persons who are willing to take the other end of the trade.
With the help of OTC broker, you get a price quoted to you up front and you don’t have to think about order books, liquidity, order book depth, markets moving, exchanges, BTC price change, trades failing and many other inconveniences of trading by yourself.
There are two main types of OTC venues:
1. An inter-dealer broker, a firm that acts as an intermediary to match a buyer and seller. An inter-dealer broker is a person who will do the advertisement for a fixed fee or charge to both the buyers and sellers for their matchmaking services.
2. A principal OTC trading company, a company that will act as the direct counterparty and takes on the end to end trading risk. Principal OTC trading company will work on the similar process as an inter-dealer broker. They can predict the value based on market demand and how well they can manage their risk..
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