What is OTC Over the Counter Market in Forex?

• How OTC works? 
• What are the risks of trading in OTC? and many more questions are answered in this article.

What is OTC Market?

OTC market is a non-centralized Over Counter forex currency dealer. Their currency exchange rates are posted on weekends on platforms like IQ Option, Olymp Trade, Pocket options, etc... for traders who trade on weekends.

Being a price action trader of binary options for 3 years now, I have done a lot of research on the OTC market price action because my observation is, OTC market price movement is very different from the regular forex market.

In this article, I will address the most common concerns of traders such as,

Why am I not able to make profitable trades in the OTC market when compared to regular forex trading?

This is due to the price movement of the OTC market being very different from the regulated weekly forex market. The main reason behind this is that in the regulated forex market traders around the world invest whereas and the number of traders, as well as the investment values, are very high when compared to the OTC market where the number of traders is less and volume is also not considered.

Volume is an important aspect of any trading strategy. When the traders observe a regular forex market during the week with Volume, Volatility, Momentum he/she understands the stability and true strength of buyers and sellers. But when this volume is not read in the OTC market, the trader will misunderstand the price movement and take the wrong decisions in trading.

Volume holds the gravity of price movement and with the absence of such gravity in OTC, a trader should image the price to move like an object that moves in space.

Is the OTC market fake or fraudulent?

You can easily compare the price action of OTC markets on different platforms and check this out yourself. In the below video, I have compared the price action/ candlesticks of  IQ Option, Olymp Trade, and Pocket Option and explained the differences.

In short, you will find a lot of discrepancies in the OTC price and candlesticks of different platforms. This is because, every platform has its own OTC dealers as partners who post data via phone, email computer on the platform. This way, on one side the OTC dealer might post a selling entry whereas the other platforms and another partner might post a buying entry. 

As the OTC market is decentralized, they just follow a high and low price in common but between that high and low, they make buying and selling entries as per the availability of data.

With all this, there is a huge window for the platforms to manipulate the price frequently and ensure that they make you lose your investment.

What is the difference between the OTC forex market and the regular forex market?

The main differences are,

• Firstly, No volume readings
• Decentralized market when compared to the regular forex market
• Very little transparency in terms of price fluctuation.
• OTC is a currency dealer and the regulated market is handled by the actual exchange authority with full control and transparency.
• OTC market could delay the updates of price due to latency issues whereas in regulated market everything is live and exact according to that period with very rare possibilities of latency issues. (But not 100%)

The market movers, big shots who move the market like banks, investors, institutions are on the weekend 😊

Why there is no volume reading for the OTC market?

By now you should have got the answer to this question. Long story short, no centralized setup and data are scattered. Due to being decentralized, having the volume reading will still not help because it won't create a setup like a regulated market where the volume from traders around the world falls in one place.

Just remember, the regulated market moves the price with heavy investments from different places in millions. If you are an investor who invests only a few 100's in the regulated market, it won't even bother to move the price a bit due to the high volume of investments.

But the same in the OTC market could make a difference in price movement.

How can I read the volume of the OTC market?

Even if you don't have the volume in the OTC market, you can still find some use full information on the "Traders Sentiment" bar that is available in the IQ Option like shown in the below image. You can read the buyer's and seller's percentages and compare them with the candlestick pattern that's forming at the time and take trades accordingly.

This is not a perfect reading but will sure help you trade with little more confidence.

I do not know the tools that are available in Olymp Trade or Pocket Option similar to this. I use IQ Option for my binary options trading.

Don't worry if you do not know candlestick or price action, you can find the completely free price action course (English and Hind) and how to trade binary options with pure candlestick analysis here on my YouTube channel.

Do not forget to 👍, 🔊 and 

More for Readers: What is Price action and how to understand it?

Check out my official website for more details on binary trading.