OTC (Over-the-Counter) trading refers to the process of buying and selling financial instruments directly between two parties, rather than through a centralized exchange like the New York Stock Exchange. This method allows for more flexible trading arrangements and can include a variety of assets, such as stocks, bonds, and derivatives. In OTC trading, transactions are often facilitated by brokers or dealers who negotiate prices and terms. This type of trading is common for less liquid assets or those that do not meet the listing requirements of formal exchanges, providing opportunities for investors to access a wider range of investment options.