Trading OTC is usually spread out into various institutions like brokers, traders, and liquidity providers and conducts these transactions over the weekend. Since there are fewer clients for OTC trading, the pricing is quite bizarre.
OTC or Over-the-counter trading has taken over the trading industry quite well and is even expanding now. Because of the feasibility, people have also used OTC assets on Pocket Option for trading now. This article will talk about the OTC assets and how investors can trade them on the weekends.
What you will read in this Post
What is OTC trading?
Before talking about OTC trading, let us talk about the OTC or Over-The-Top Markets. An OTC market is spread out thoroughly into small fragments where participants can trade currencies, commodities, stocks, and various types of instruments between two parties where no broker is available. These markets do not have a specific place or platform, but all the trading is done through a digital and electronic platform, even though it should not be confused with an auction system.
Dealers become the makers of the market as they decide the price of the financial asset like a currency, security, etc. since the trading takes place between two people, others won’t be aware of the price of the product. This leads to low transparency in financial exchange with less regulation.
Dealers can quote a price of their choice, and the other participant may buy the financial product at the quoted price only.
Trading on weekends with OTC assets on Pocket Option
Trading on weekends consists of more than just a place of trade. While some traders may use this opportunity to study the market, others look for opportunities in trading and routinely practice their strategies during this time.
- Weekend trading helps in gaining confidence so that when Monday comes and the market opens, traders can start trading more mindfully.
- This is a great opportunity for those who cannot actively participate on weekdays and only get a Saturday and Sunday as free days.
- Scalpers can also trade on weekends as the market is liquid enough and open as well.
- Cryptocurrency is available 7 days a week for 24×7 and can be traded on the weekend.
Weekends are especially closed for traders who want to trade in stocks and read about the swing trading of Markets so that they can look for opportunities for the weekday as well.
Swing-trading is not affected by the costs of transactions as they hold the trade for a long time with high profits as well.
Benefits of trading OTC
Companies that are smaller in size and less liquid in nature can present themselves as a trading platform. Those companies that could not be listed for a standard exchange could benefit from this platform. There are way more benefits:
- OTC is reasonable for companies as the new issues cost very low, and the cost of helping the investors is low as well. It is quite a cost-efficient platform.
- Small companies with low traffic can also put themselves in the OTC market.
- New issues and secondary markets are available for the Dealer to operate.
- Investors get a good deal as well as options from dealers in the market to choose the assets from both primary and secondary markets.
- There is no short or bad delivery of products as the trading system is very clear and transparent.
- Customers can freely access information on the market as there is no messenger between them, and the contact is direct.
- OTC trading is very common in the market right now with one of the most voluminous electric transactions.
- OTC market, as compared to a standard exchange, is different since it is decentralized or spread out. Investors can even buy small companies with great ideas and make them the most famous company.
- It is cost-effective for both investors and companies as the investors need not buy stock exchanges only.
- OTC was created in a way that explains why certain securities suffered through economic disasters.
- OTC markets are great for trading big products as there is no need to read the public order books as a mandatory step.
What are OTC derivatives?
OTC derivatives are securities whose prices are decided according to the value of the asset in question. The assets could be anything like bonds, commodities, stocks, etc. trading of such derivatives offers firms to negotiate the best trade between two participants.
Types of OTC derivatives
There are four types of OTC derivatives
- Commodity derivatives – they have the assets, which are commodities like grains, food, gold, etc., such as Forward contracts.
- Forex derivatives – in this type of derivative, a change in the rates of foreign exchange are the assets that a customer can choose.
- Fixed Income derivative – fixed income security is the asset used in Fixed income derivative.
- Credit derivatives – in this type, the credit risk is transferred from one part to other without exchanging the asset. They can be funded or unfunded.
OTC assets on the Pocket Option
Pocket Option also offers over-the-counter trading on its platform, where you can choose from a wide variety of assets. Locate the “Fixed time tab” on the platform and choose “OTC.” A display drop-down list of all the available assets will appear on the screen.
There are many OTC assets that are offered by the Pocket Option, some of them are:
All of these OTC assets are available for only fixed-time trading sessions. You can even see their return rate written right next to them. If you need to see other instruments and their information as well, select the “information” option present on the right-hand side.
You can trade on a fixed schedule on weekends for forex, i.e., from 21:00 UTC Sunday to 21:00 UTC Friday.
However, as OTC assets can be traded even on the weekends also, it starts immediately after the UTC session closes on Friday at 21:00. Then the session is open for 48 hours straight, and you can trade to your heart’s content.
You can even see the time schedule according to time zones on the platform, specific for each asset. Cryptocurrency is also available for trade on the weekends as well by the Pocket Option firm. However, take some free time from trading as you need to have a fresh mind to trade every time. Therefore, leave weekends for rest only. Moreover, you will be able to clear your mind on the weekend and return better on the weekdays for a great trading session.
Benefits of trading on weekends
The main advantage of trading on a weekend is that you can easily trade without much hustle on the weekend and further analyze the market in peace.
Some people may not be able to trade on weekdays with their daily jobs. So they can trade on the weekends easily without any problem. Even cryptocurrencies are available on the weekends.
The more time you can spend on trading; the better opportunity you will find in terms of profits.
There is the flexibility that comes with weekend trading as it does not hamper or hinder your weekday schedule, and you can still find some profit by investing your weekend in making money.
Asian markets are open to new strategies, and these work better when applied during the weekends as the market conditions are different on a Saturday than a Monday.
Demerits of trading on weekends
Time zones may not match your trading session as your body clock may restrict on the weekend and may require rest. Some people who may be based in UK and trading for stock exchanges in the Middle East would find it difficult with such a different time zone.
The volume in the market is quite low on the weekends as some shops could close on a weekend.
There are much fewer options in assets available on the weekends even though cryptocurrency is available. For example, Twitter and Nokia are not available on weekends for stock exchange which could bring you most of the profit for your trading session.
Pocket Option has given its clients the ultimate platform as it also allows 7-day trading sessions without any actual interruptions. The weekend trading session starts from late Sunday to Friday. You can even trade with OTC assets and cryptos at this time. You need to be focused when you are trading OTC as they could get emotionally draining, and you might lose your money in desperation.
Always remember to rest and think before trading again and keep taking breaks now and then. Also, use the demo account on the Pocket Option platform to try these assets and strategies out before investing from the actual live accounts. This way, you can learn how the OTC assets work and what you need to learn before trading from the real accounts.
Moreover, trading on a weekend should be done to understand the market and analyze its working in peace.