In the game of digital currency, only the brokers come out winners. But what if there was a way for you to buy or sell crypto-currency without moving the market up or down. After all, if you have a significant amount of crypto-currency for trade or are looking to buy a large sum, buying or selling over the exchange can end up being a costly endeavor.
If you are playing the game, then you know that the best way to make such high exchanges is to use OTC. Over the counter, trading doesn’t affect the market one bit. But if you don’t know what you are doing, you might have wished you took your chances on the crypto-currency exchange market. With so many different points and players to watch out for, your investment in crypto-currency could end up costing you more than you imagined when you play the market wrong.
Of course, no one wants to lose their shirt when buying or selling crypto-currencies, but it happens to those who are new to the game. That is why a lot of investors choose to go with OTC trading.
Over the Counter Trading
OTC trading merely is trading directly between two parties instead of using the market. There are two ways you can go about trading OTC. The first is using an inter-dealer broker who is a firm that helps match buyer and seller. With an inter-dealer, you get a fixed fee for both the buyer and the seller to compensate the firm for their matchmaking services.
The second venue for OTC trading is to hunt for a principal OTC trading corporation or company. Usually, this firm acts as the secondary party and takes a lot of the risks. Of course this venue charges fees as well that can be equal or greater than what inter-dealer charges. If you go with the principal OTC company, it is important to note that they look at all angles of the deal. The company checks the market and are always looking for ways to hedge their side of the agreement along with ways to profit from the trade.
When dealing with brokers from either venue, you should know that it won’t come cheap. Unlike using the market to make your trade where everything is available for you to see, with an OTC broker you won’t know what the market looks like that day, or what the broker will be charging. Of course, the second reason people go with OTC brokers is to remain anonymous. After all, you don’t want the world to know what you have in your pocket.
But some people chose to go with OTC trading for other reasons. However, if you go into this kind of deal blindly, you might end up with the short end of the stick. Brokers are after one thing, earning money and they trade for a living. So how do you go about using an OTC broker to exchange large amounts of crypto-currencies?
Winning Strategies For Dealing With OTC Brokers
Getting the Best Deal vs. Face Value
Playing the game of crypto-trading is a lot like playing a hand of poker. You don’t want to show your hand until the last minute. A lot of traders make this mistake when dealing with an OTC broker. You may think that you can shop around to get the better deal. After all, being a consumer is all about getting the best bang for your buck. With crypto-currency though, you don’t want to arbitrarily call brokers asking for their rates and the amount you want to trade. This would be the equivalent of you showing your hand to the dealer at a poker table.
The information you give out to the brokers over the phone can be used against you. For example, say you are looking to trade 1,000 Bitcoins or more, and you call an inter-dealer. That dealer will now reach out to their network in search of a buyer. In the meantime, that same network now knows there is a player in the game who is motivated to sell. What is going to happen is the network can now stop their buy orders, which will lower the price of Bitcoin to secure a better rate for the network once your trade goes through. Pretty tricky right?
Instead, pick one or two brokers to deal with and make the trade happen quickly without the word spreading too rapidly. The more time your broker has sitting on your deal, the more chances they have of swaying the market in their favor. Don’t give them that time by shopping around. Stick to one and push the deal through fast.
The Price is Right
Remember that the network of brokers is relatively small and word spreads fast in their network. So when you are on a call with a potential broker, you need to ask for both buy and sell rates. Don’t make it clear or specific that you are selling or buying. Keep your options open so that the broker you are dealing doesn’t know your game plan.
Case in point, say you are selling your crypto-currency. You mention that to a broker, and as soon as they hang up with you, they are selling their shares of that currency. After all, it is a sell high, buy low world with brokers. They push their currency and score a high price. Once you sell, the market is now low, and they can buy back their currency at a cheaper rate.
What you should do instead is hunt for a broker before you even need one. Make the call and ask relevant questions like what their fees are, what the market looks like for both sides of the coin. Ask them broad questions that cover both buying and selling aspects. That way, the broker doesn’t know if you are a serious contender or just a tire kicker. And whatever you do, don’t mention how much you are trading or buying.
Timing is Everything
Another thing you should do when dealing with brokers is unpredictable. If you have a significant amount of the digital currency you are trying to get rid of, don’t sell it off all at once. Split it up into several smaller amounts to keep the brokers guessing on what you have. Plus trading a more modest amount will be more profitable for you with broker fees.
Also, if you use the same broker, call during different times of the day and on different days. Brokers want to be able to find a way to make as much money as possible from their trades. So don’t give them any excuse to use your trade to their advantage.
Also, you shouldn’t buy or sell when the market is incredibly high or snail slow. You should pick a time in between that allows you the best options and rates.
When it comes to the game of buy and sell it is always best to do some research. Make the calls if you must keep your cards close to your chest. Don’t let the OTC brokers know what you are playing with. This way they can’t gouge you for different rates or lure you in with a ‘too-good-to-be-true-rate” only to nail you later with the real amount. Shopping around may work for other things, but not when it comes to digital currencies.
With the exchange market so versatile it is difficult to know when a good time to buy or sell is. That is why you should have your broker picked out before you make any trades. And once you have a deal on the table, push it through quickly to earn the most bang for your buck without getting taken for a joy ride by your broker.