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An OTC (Over-The-Counter) order is a type of buy or sell order for financial assets that takes place outside of organized markets, such as stock exchanges or futures markets.
In an OTC order, a buyer and a seller negotiate directly with each other, without the intervention of an organized market. This means that there is no centralized platform that sets prices or provides liquidity.
OTC orders are often used to trade financial assets that are not listed on organized markets, such as corporate bonds, credit instruments, or cryptocurrencies.
Some characteristics of OTC orders are:
- *Flexibility*: OTC orders can be customized to meet the specific needs of the buyer and the seller.
- *Privacy*: OTC orders take place outside of organized markets, which means there is not total transparency over the transactions.
- *Risk*: OTC orders may carry a higher risk than trades in organized markets, as there is no centralized platform that provides liquidity or sets prices.
In the context of cryptocurrencies, OTC orders are commonly used to trade large amounts of cryptocurrencies, as organized markets may not have enough liquidity to meet the needs of institutional investors.