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Trends & Analysis
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Gold continues to shine amid geopolitical worries

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GBP/USD recovers following wage report

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Trends & Analysis
News

Gold continues to shine amid geopolitical worries

News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

Over the counter definition

Over the counter (OTC) refers to a decentralised market where traders can buy and sell securities directly between themselves, without the involvement of clearinghouses or exchanges. Trading OTC occurs within a network of brokers, market makers, and dealers, who facilitate the transactions.

How OTC trading works

Traders can buy and sell a variety of instruments over the counter, such as stocks, bonds, currencies, commodities, and derivatives. However, OTC trading is typically more prevalent for forex and OTC derivatives, such as options and swaps.
In OTC trading, dealers and brokers negotiate directly with each other outside of centralised exchanges, and they come to an agreement on terms such as price, quantity, and delivery. They do not have to follow exchange rules and regulations, and transactions are typically conducted on electronic platforms.

An example of OTC trading

A trader wants to purchase 100,000 euros and sell an equivalent amount of US dollars. They can contact a counterparty, such as a bank, broker, or another forex trader directly, to negotiate a price and execute the trade, given that both parties agree on the terms of trade.

Managing risk when trading over the counter

Though OTC trading can be an easy and flexible way for traders to exchange securities, traders must be cautious of counterparty risk. Counterparty risk is the uncertainty that the other trading party will not be able to fulfil their financial obligations. To manage this, traders should work with a licensed broker and diversify their counterparties to minimise the risk of potential losses.

Start trading with ADSS

ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

See all glossary trading terms


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Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.