What is a dealer?
A dealer is someone who trades either on their own account or on behalf of a client. Thus the dealer differs from both the trader, who acts only of their own account, and the broker, who acts only for clients. By offering buy and sell prices, they provide liquidity. Dealers are found in all markets – shares, bonds, currencies and commodities.
Where have you heard about dealers?
During periods of high financial excitement – either a boom or a bust – dealers find themselves in the limelight as they are variously praised or blamed in the media for pumping up asset prices or profiting from market misfortunes.
What you need to know about dealers...
There are as many different types of dealers as there are markets. Some have traditionally been strictly regulated, such as share traders, while supervision came relatively late to others, such as commodity and currency dealers.
But the aim of the dealer has changed little over the centuries. It remains to make a profit on their stock of assets in other words, to buy low and sell high. In some markets, dealers may be contacted direct by private investors, in others they may conduct business only through intermediaries, such as brokers.