Broker trader definition
A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futuresoptionsand similar financial derivatives. Clients who trade commodity contracts are either hedgers using the derivatives markets to manage risk, or speculators who are willing to assume that risk from hedgers in hopes of a profit.
Ever since the s, the majority of commodity contracts traded are broker trader definition derivatives with financial broker trader definition assets such as stock indexes and currencies.
When executing trades on behalf of a client in exchange for a commission he is acting in the role of a broker. When trading on behalf of his own account, or for the account of his employer, he is acting in the role of a trader.
Floor trading is conducted in the pits of a commodity exchange via open outcry. A floor broker is different than a "floor trader" he or she also works on the floor of the exchange, makes trades as a principal for his or broker trader definition own account. IBs do not actually hold customer funds to margin. Broker trader definition advise commodity pools and offer managed futures accounts. CTAs exercise discretion over their clients' accounts, meaning that they have power of attorney to trade the clients account on his behalf according to the client's trading objectives.