Once you have obtained a cryptocurrency wallet and have found an exchange you want to trade on, what’s next? The options for cryptocurrency trading flings between the traditional cryptocurrency exchange and over-the-counter (OTC) trading. And while the traditional exchange has its own perks, OTC trading breaks the limit of market trading and is mostly the reason for a successful cryptocurrency trading.
Over-the-counter trading has its pros and cons. While it does offer faster transactions and better prices, it comes with other risks like slippage and counterparty risk. Traders who would consider OTC must take note of the basics to guarantee a successful transaction.
Consider an OTC broker before you even need them
An OTC broker can help you with your cryptocurrency trading as they remove the possible counterparty risks, however, traders should stay vigilant with how they deal with their brokers and should remain anonymous with the amount you are trying to trade. Do take note that it is best to talk to one before you need to buy or sell cryptocurrency. If you deal with a broker, it is best to close a deal as soon as possible before word spreads about the amount you have as brokers tend to put a higher price of the securities they have so they could deal cryptocurrency themselves.
Review the current market value and cryptocurrency trends
Though dealing with an OTC broker somehow puts you in a secured state, buyer-to-seller transactions are still preferred by some. In this case, check the current market value and trends of cryptocurrency shares. OTC trading offers better prices for both buyers and sellers but would be counterproductive when prices are placed at a market value. Remember that with OTC trading, prices are usually placed at a wider range compared to market values.
Check the platform you are using
With the different platforms of cryptocurrency trading, choosing the best one for your trade is important. It’s always best to get hybrid wallets or multiple wallets of different cryptocurrencies so you can exchange and deal different types. It’s also best to use a platform with good authentication and platform security.
And double check the user reviews
Similar with OTC brokers, a buyer must always check a seller’s reviews and vice versa, if available. One of OTC’s biggest challenges is counterparty risk and every trader must always gather information about their parties involved with their trading. Highly reviewed buyers or sellers are always the ones to go to but don’t forget to settle your smart contracts either way.
Risk what you can only risk — even after each transaction
Susan Cain, the author of Quiet: The Power of Introverts in a World That Can’t Stop Talking, writes about people’s personalities during the 2007–2008 trading disaster. As you may know, most trading that lead to the financial crisis was done with OTC trading and she noted that some people (mostly extroverts) tend to make rash decisions during trading, even though warning signs of the market slippage were right in front of their faces. As a result, a lot of people lost their life savings because people risked what they thought they could risk rather than considering stepping back and watching out for market trends. During events of a successful or unsuccessful transaction, one must always note of the current assets they have gained or lost and the amount they are willing to risk again, even with cryptocurrency trading. Closing a good deal doesn’t always equate to a successful continuous trading so it is best to think about your next move after each transaction.
https://medium.com/@cubebitofficial/a-beginners-guide-to-otc-and-cryptocurrency-trading-4ec73d6079fa
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