OTC (Over-the-Counter)
OTC means trading happens directly between parties rather than on a central exchange - forex is the largest OTC market.
OTC means trading directly between parties instead of on a central exchange. Forex is the largest OTC market: no central exchange, no central price, and near-24-hour trading.
Over-the-counter (OTC) describes markets where trades happen directly between counterparties, through dealers and electronic networks, rather than on a central exchange with a central order book. Forex is the world's largest OTC market: no single exchange, no single price, just a global web of banks, brokers and liquidity providers quoting each other. That structure is why forex trades nearly 24 hours a day, and why prices can vary slightly between brokers at the same moment.
How It Works
- Counterparties trade directly or via electronic networks
- No central order book or exchange price
- Prices come from the liquidity each broker can access
Trading Tips
Slight price differences between brokers are normal OTC structure
Execution quality depends on the broker's liquidity, which is why reviews matter
Regulation still applies to OTC brokers - OTC does not mean unregulated
OTC (Over-the-Counter) Example
Say EUR/USD quotes 1.0850 at your broker and 1.0851 at another in the same second. Both are correct: with no central exchange, each dealer prices its own book. Stocks have one tape. Forex has thousands of simultaneous truths.
How Traders Use OTC (Over-the-Counter)
Trade OTC markets with two price sources visible to catch feed errors and compare fills across venues. Your broker quote is a private offer, so loyalty to one feed costs money over time.
Related Terms
Put Your Knowledge Into Practice
Compare regulated brokers and find the best one for your trading style.