There are many ways to invest in cryptocurrencies, including buying on an exchange, lending money to margin traders on exchanges, and investing in ICOs (initial coin offerings) or IEOs (initial exchange offerings). One of the most accessible ways to enter the world of cryptocurrency trading is through crypto OTC trading (in which OTC stands for over-the-counter).
Crypto OTC Trading
Crypto OTC trading is essentially trading cryptocurrency with another person, rather than on an exchange. OTC trades occur between friends, or between a professional broker and their client. For many traders who are new to the world of crypto, they may want to explore this option for their first few trades.
Before you trade over-the-counter, it is key to understand the pros and cons of this method of trading.
Here are some tips for you before you start crypto OTC trading:
Study the Market
Supply and demand drive the cryptocurrency market, like any other commodity or asset. When it comes to crypto OTC trading, this means that buyers want to know what they should pay for a certain amount of cryptocurrency. Sellers want to know what the highest price is that buyers will pay.
Before you trade with someone, make sure you have a good idea of what the market looks like. The last thing you want is to be ripped off by trading at a bad time!
Know Your Product
It is wise to be up to date with the news on the coin you are trading. For example, knowing that a coin is having some technical difficulties that are affecting its price. Much of crypto OTC trading occurs with coins that are top 100 or lower market cap coins, meaning it is easy to get up to speed on the latest developments surrounding them.
Know What You Are Selling
Understand what you are selling. If you do not, there is a chance that the person on the other end of the trade may not understand it either. You do not want to get into crypto OTC trading where one of you ends up with an asset that they did not mean to buy. Read more about the cryptocurrency you are selling on reputable sites and make sure you know its key specifications.
Know What You Are Buying
Make sure that the cryptocurrency you are getting in return is exactly the one that you want to get out of this trade.
This is especially important for ERC20 tokens, where a single mistake can cause you to lose all your money. Make sure that the sender has sent the right amount of the correct token from their wallet, and not from an exchange or another person’s wallet.
Know If It’s a Good Time to Buy or Sell
For many newer cryptocurrencies, crypto OTC trading usually happens when the coin is down in price. Many people are looking to buy into these falling prices, hoping that they will rise again in the future. Keep an eye on your chosen cryptocurrencies’ price and if it falls far below what you think it should be worth, make a choice whether you want to sell now or wait for the price to go up again.
Know the Risks
Crypto OTC trading is a way of being able to get cryptocurrency without going through an exchange. This allows you to trade with people who are not on the exchanges, which may end up saving you money.
On the other hand, these trades can be less secure than exchanges since they are often handled by private individuals rather than by professional traders. You may want to check out some best practices for trading on Telegram, such as not revealing your cryptocurrency wallet address.
You need to handle your crypto OTC trading with care and understand them before you engage in one of your own. Make sure that the people on the other end of the trade are trustworthy and know what they are doing. Keeping these tips in mind will help you have a successful crypto OTC trade.
Conclusion
I hope this article has helped shed some light on crypto OTC trading. This is a highly profitable way of trading cryptocurrencies. In addition, I recommend it for anyone getting involved in the space. Look out for news on how to buy and sell cryptocurrencies safely!
