What does Over The Counter stand for?
Over the counter (OTC) is explained as an outside centralized trading market, especially for small companies. Many trades take place in OTC trading like stocks, commodities, currencies or any other securities which happens between the investor and broker without any involvement of the central broking system or exchange. Investors can reach full-time brokers or online broker companies through emails, telephones or any other electronic means. Many online trading companies are available and increasing day by day. Aladiex is one of the trustworthy online broker companies which are launching OTC trading on 15th June of this year. Aladiex helps many small companies that are unlisted in NYC to manage and raise their assets.
What is the difference between OTC and other trades?.
Over the counter(OTC) market is entirely different from other auction market system. In OTC, dealers are the
market makers. Dealers are the ones who quote and decide the prices of trading of securities, currencies and other products of finances in the market.
two significant orders.
How to trade on OTC? A simple step-by-step process will help you to know the trading process.
- Select an excellent broker-dealer: To trade on OTC, you need to select a good market maker who is registered under FINRA. You can choose online broker companies or offline full-service brokers. Online companies like Aladiex will make trading hassle-free.
- Make the right investment decisions: Do your research about the market-makers through www.otcmarkets.com and study the companies’ news and trade data.
- Specify your order: You can choose to instruct your market dealer to handle requests as per your wish. Limit orders and Market orders are the
Limit order: Where you can specify the exact price you are willing to invest in the trade. They will not spend it if the price is more than your quoted ones.
Market Order: A market will bid the best offer as per the current market price.
- Broker-Dealers role: Once he receives the deal from you, he will follow the below steps.
Internal trade execution: They will determine whether it is a limited order or marker order. If it is a limited order, they will quote the best price available in the market.
External trade execution: If the broker cannot trade it internally, they will seek external help from other OTC trade broker-dealer.OTC Link® ATS helps the process of foreign trading.
Creates/edits the Quote on OTC Link® ATS: If the order is limited, the broker-dealer will build or modify the price as per the quoted price.
The trading limited orders externally: Once the limited order is edited, OTC Link® ATS will get messages from other dealers. The broker-dealers can accept or decline or counter the price.
- Reporting, clearing and settling trade: If the broker-dealer accepts the deal through other means of OTC Link® ATS, he will report, clears and settles the contract with the investor. Then he says to FINRA and gets the settlement and clearance from