OTC (Over-the-Counter)

Over-the-counter (OTC) trading occurs directly between two parties without going through a centralized exchange. The forex market is primarily OTC, meaning trades are conducted through a network of dealers, banks, and electronic platforms rather than on a single exchange like the NYSE or NASDAQ. This structure is why forex can trade 24 hours and why prices can vary slightly between different brokers and liquidity providers.

The OTC structure has advantages and tradeoffs. Advantages include continuous trading across global sessions, massive liquidity for major pairs, tight spreads during active hours, and broad accessibility for retail traders. Tradeoffs include less transparency than exchange-traded markets (though this has improved considerably with electronic platforms), counterparty risk (mitigated by regulation), and slight price discrepancies between brokers. Most retail forex is priced off the interbank market with spreads added by the broker or ECN aggregator.

For example, EUR/USD at any given moment might be quoted at 1.0850 on one broker, 1.08498 on another, and 1.08502 on a third. All are derived from the deep interbank market but reflect each broker's specific liquidity providers, spread markup, and routing. The differences are usually sub-pip and do not meaningfully affect strategy performance, but they do mean results between two identical trades on different brokers can differ slightly.

In copy trading, the OTC structure means that subscriber broker choice directly affects results. SteadyFlowFX's 9 algorithms trade 8 currency pairs at the master account, and the verified Myfxbook 71.3 percent win rate reflects the master's specific broker conditions. Subscribers using brokers with comparable liquidity, low latency, and tight spreads will see results closest to the master. Understanding OTC helps subscribers see why broker selection matters for reproducing published performance.