Monday June 6, 2016 - 18:41:39 GMT
Share This Story
Global-View.com - www.global-view.com
Best OTC Products To Trade
OTC, or Over-the-Counter is a security traded through a dealer network, and not on a centralized market. Basically, such products can be stocks of small companies that are not listed on exchange markets mainly because they don’t meet the listing criteria, or other financial instruments, like, for instance, bonds, or derivatives (contracts between parties on assets such as currencies, bonds, commodities etc.). A broker-dealer trades these products over-the-counter, by a broker, through direct negotiation with another party. Such broker-dealers are registered with respective regulatory authorities. In the US, for instance, they must be registered with FINRA (Financial Industry Regulatory Authority).
Basically, if you want to trade OTC, you must first find a broker-dealer, decide on what OTC you want to trade, decide on the limits, and then the broker-dealer executes the order. These are the technical steps. But what are the best OTC to trade?
Bonds with high yields
Bonds represent some of the most popular OTC with traders. And among those, the best traded are company issued bonds. In order to raise money, private companies issue bonds. They account for a market of over 5 trillion USD, with about 700 billion USD in corporate bonds. Therefore, liquidity is good enough for traders to be able to sell them before maturity. Corporate bonds also have bigger yields compared to government issued bonds, but also encompass bigger risks. Such as the possibility that a corporation lacks money to buy back the bonds or decides to redeem them before maturity.
Stocks with high risks
Another popular instrument is OTC stock. This is issued by unlisted companies or by companies who don’t meet all the requirements of an exchange market for listing. Some of the best-known companies first started with OTC stocks, and then made it to the full listing on stock exchange markets. These financial trading products are, however, enrolled with the OTCBB (Over the Counter Bulletin Board) or with the pink sheets. While some of these stocks can have rather low liquidity and lower profitability, other can be a moneymaker. All depends on information and the ability to make an accurate forecast on the business.
Forex offers good opportunities
Maybe the best-received OTC on the market comes from Forex. Currency trading is not done through a centralized market, and thus the price is not standardized. Traders all over the world are connected and can place unlimited orders, and the fees are significantly lower compared to exchange markets. Basically, traders have at their disposal a global market, opened 24 hours, where everybody can trade, be it companies, individuals, banks. This offers a wide variety of instruments, a high liquidity, and large price fluctuation. All the ingredients to make money if one has the ability to capitalize on them.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."