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Finance GlossaryOver-the-Counter (OTC)
Over-the-Counter (OTC)
Definition of Over-the-Counter (OTC)
Over-the-Counter (OTC) refers to a decentralised marketplace wherein financial instruments are traded directly between two parties without the supervision of a formal exchange, such as NSE or BSE. This trading is done through a dealer network (broker-dealers) over the phone or electronically. The OTC market is less regulated and less transparent than exchange-traded markets and frequently involves customised agreements between institutions.
Related Terms
Stochastic Oscillator
The Stochastic oscillator is a momentum indicator used in technical analysis. Investors use this indicator to identify conditions where a stock may be overbought or oversold. It compares the closing price of a stock to its price range over a certain period. If the value is above 80, it indicates overbought conditions. If it is below 20, the conditions are considered oversold. The Stochastic oscillator helps investors identify potential reversals.
Open-End Fund
An open-end fund, also referred to as a mutual fund in India, is an investment vehicle that is constantly issuing new shares to investors and also redeeming shares on request. This structure means that the fund's total assets under management (AUM) and the number of outstanding shares change daily depending on the investor's purchases and redemptions.
Accrued Expenses
An accrued expense is the cost that is incurred in the current accounting period but is due to be paid in the future.
More simply, an accrued expense is an unpaid bill due in the future for goods or services that have already been received by a company.
Accrued expenses show up as liabilities on a company’s books.
More simply, an accrued expense is an unpaid bill due in the future for goods or services that have already been received by a company.
Accrued expenses show up as liabilities on a company’s books.
Support Level
The support level refers to a specific price point where traders or investors consistently find buying interest in a stock or asset. This prevents the price from falling further. It works like a base that holds the price up. However, if the price breaks the support and drops below this level, it may indicate weakness in the stock. On the other hand, bouncing off the support level points to a potential buying opportunity.
Market Depth
The number of buy and sell orders available at different price levels for a stock denotes its Market Depth. It helps traders understand supply and demand in the market. Strong market depth means there are many buyers and sellers, making it easier to enter or exit trades without causing large price changes.
Defensive Stock
A defensive stock refers to the shares of iconic companies that generate stable and consistent returns and dividends, regardless of the market conditions.
Defensive stocks are rare because companies that have defense against every market condition are rare.
While defensive stocks may not generate high returns, they are known to add stability and defense against declining economic conditions. In India, stock of ITC Limited is an example of a defensive stock.
Defensive stocks are rare because companies that have defense against every market condition are rare.
While defensive stocks may not generate high returns, they are known to add stability and defense against declining economic conditions. In India, stock of ITC Limited is an example of a defensive stock.
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