Is the term Otaku derogatory? I know the term is widely used in America as a term for someone who has a love and anime and all things related to it. So in the US it's a term of endearment. 

However in Japan the term is known more or less to be used to describe a shut-in / loner. But it actually originated from a few variations. One being the name of a stalker / murderer another just meaning someone with a love for Japanese culture. 

So is the term really bad, good or more or less up to the individual to find a meaning?
This is somehow related to my question which has been closed (and I wonder why but I respect the administrator's decision). As far as I know, in Japan, the term otaku isn't positive at all. It means the same as being a geek or nerd or someone who's obsessed with something. And according to TVTropes,


  Otaku come in many flavors, but one thing can be said for each and
  every one of them. They've each staked out their own favorite thing,
  and they obsess over it relentlessly. Regardless of other
  intelligence, an otaku will have an obsessive, unhealthy, and almost
  encyclopedic knowledge of their chosen topic.
  
  There are almost as many flavors of this type of character as there
  are things under the sun, but a few of the major ones are:
  
  
  Anime or Manga Otaku
  Cosplay Otaku
  Gaming Otaku
  Idol Otaku (wota)
  Military Otaku
  Technology Otaku 
  
  
  Essentially, someone could be an otaku about just about anything:
  politics, sports, history, etc. When otaku is used by itself by a
  Westerner, 99% of the time it will mean "anime/manga otaku".
  
  Neither geek nor nerd is an adequate translation. However, in modern
  use, both words may carry a shadow of the right connotations of
  obsessive interest and/or social ineptitude. Think of the older, more pejorative senses of geek
  and you're on the right track - the British term anorak is also a
  close translation. In Japan, the term Otaku does not carry a positive
  meaning, at all.
  
  A semi-related term is hikikomori, which refers to a teenager or young
  adult who withdraws completely from society for an extended period,
  typically isolating themselves within their parents' house and become
  psychologically fixated to particular hobbies; hikikomori in media are
  usually otaku of some sort. Hikikomori are also critically viewed as
  lazy and outright creepy, which doesn't help the perception of otaku
  much. Especially after 1989, when serial killer Tsutomu Miyazaki was
  shown to be both an otaku and hikikomori, leading to a moral panic.


So I think the term otaku and being otaku yourself connotes something negative in Japan. Though, there are a lot of anime nowadays that features otaku characters. A major example is Lucky Star so I think they are somehow removing that negative connotations about being an otaku, though not generally.