Over-the-Counter, OTC Forex brokers, offer a much less regulated and informal market of exchange, where traders can trade securities that are less well known and perhaps not available on other major exchanges.

As opposed to the major exchanges, Over-The-Counter trading is organized by dealer groups and doesn’t happen within a single institution. Dealers work like “market makers” and agree to keep a specific number of assets to ensure that they’re available. They are also the ones who quote the bid and ask prices for their customers and other dealers.

There are many options for buying securities these days and many traders are used to making their trades quickly with prices that are transparent. The trading of securities that are well-known usually takes place on a formal exchange. Formal exchanges are big organizations that follow set rules to ensure the market is active and that there is a strong supply and demand.

 

Over-The-Counter Forex Brokers List

Broker
Description
Trade Now
Octafx
OctaFX
Regulation: CySec
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.4 pips

Review


FP Markets
FP Markets

Regulation: ASIC, CySEC
Min. Deposit: $/€/£ 100
Leverage: 1:500
Spreads: Ultra Tight from 0.0 pips

Review


NSBroker
NSBroker
Regulation: MSFA, BaFin, FCA,
Min. Deposit: $250
Leverage: 1:100
Spreads: Low as 1.2 pips

Review
XM
XM
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.1 pips

Review
Avatrade
Avatrade
Regulation: ASIC,JFSA,FSCA
Min. Deposit: $/€/£ 250
Leverage: 1:400
Spreads: Floating from 1 pip

Review


IC Markets
IC Markets
Regulation: ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:500
Spreads: Low as 0.0 pips

Review


Etoro
Etoro
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:30
Spreads: Variable

Review

XTB
XTB
Regulation: FCA
Min. Deposit: $/€/£ 250
Leverage: 1:30
Spreads: Low as 0.1 pips

Review


IQOption
IQOption


Regulation: CySec
Min. Deposit: $/€/£ 10
Leverage: 1:1000
Spreads: Floating from 1 pip

Review


OlympTrade
OlympTrade
Regulation: IFC
Min. Deposit: $/€/£ 10
Leverage: 1:500
Spreads: Low as 0.0 pips

Review
Globex360
GlobeX360
Regulation: FSCA
Min. Deposit: No min Deposit
Leverage: 1:500
Spreads: Low as 1.6 pips

Review

 

Over-The-Counter (OTC) Forex Trading

Over-the-counter trading is commonplace in Forex, as well as other markets. In fact, Over-The-Counter Forex brokers are the most common way of trading Forex. This model of execution means deals are performed over-the-counter, with the broker acting as “market maker”. The trades are made between the two parties under no supervision of a formal exchange.

What is the Role of an Over-The-Counter FX Broker?

The primary objective of an OTC FX broker is to look for the best trades and offering a link for customers who are searching to purchase or sell both financial and non-financial, goods over-the-counter. Regardless of the fact that FX brokers are completely autonomous players in the OTC financial markets, regulatory limitation force brokers to act as an intermediary. This means that they take no positive or negative positions in the financial markets.

These OTC Forex brokers are the most well-known financial services providers as they offer constant contact among leading consumers in the financial industry. The leading consumers include: insurance companies, private firms with large investments, banks, and financial entities. This means that they have to supervise the trade deals through Over-The-Counter methods trade interactions between both parties, yet they should not supervise the exchange itself.

Advantages of Over-The-Counter (OTC) Forex Trading

There are advantages to trading Over-The-Counter for investors. Firstly, they are often much less expensive than the formal exchanges and traders can buy larger quantities at earlier stages. A second advantage is that the securities offered are not as widely offered on other platforms, meaning that the deals are less-competitive and thus better priced.

The Risks of Over-The-Counter (OTC) Trading

There are some risks to Over-the-Counter trading. There is an existence a potential for profit, but there are risks too, like the lack of information made public about the securities that are being traded. Essentially, there is less regulation and less transparency. The trading is decentralized and carried out by the Over-The-Counter Forex broker. For the trading to be deemed reliable, Over-The-Counter brokers really should be regulated by authorities given that this is the only way that brokerage can be controlled. Without this, you don’t ever really know whether the broker is just faking its status. Many Over-The-Counter brokers are new with no track record. They may actually have no assets or revenues. Additionally, Over-The-Counter brokers can withdraw at any time which can cause liquidity to slow, hampering the buy or sale-ability of participants.

Given the information about the risks listed above, it is essential that traders do their research and consider consulting professionals before trading Forex Over-The-Counter. There are reputable brokers out there but someone with inexperience may need pointing in the right direction.

How to Find the Best OTC Forex Brokers?

There are several essential criteria that traders need to consider when they are looking for the right OTC Forex broker to invest with, and open an account with. The three conditions that traders need to evaluate are: fees, quality of technical support to customers, and extensive background and knowledge of the financial markets.

1-      Fees

The best method to avoid paying too high fees for an OTC Forex broker is to look around the financial market by contacting various potential brokers on the phone and inquiring them about their transaction costs and broker fees. This way a trader can be able to choose the cheapest broker, without having to pay extra fees that are considered unnecessary.

 

2-      Quality of Technical Support for Customers

When trading with OTC Forex brokers, there is no protection of the financial transaction. This means that the trader and the broker must have a mutually beneficial relationship of trust, where the trader must trust in the skill of the broker. The OTC broker must have an extensive understanding of the trade’s needs in investment, and the objectives they want to achieve; the broker must also be aware of the trader’s financial circumstances before entering into any trade deal. With OTC contracts, it is much more complicated than that of exchange trading, which is why customer service is crucial for OTC FX brokers.

3- Knowledge on the Financial Markets

With OTC Forex brokers, the operations are less transparent and the regulations are not that strongly enforced. The Over-the-Counter market in itself is decentralized, which means that a client will need a brokerage firm who knows the ins-and-outs of the trading industry. Brokers can provide traders a way to save money, effort, and time, all the while offering important advice in money management, trading, and investment.