Though you might use the term broker to describe
all the professionals who buy and sell stocks, the financial markets
use other, more specific titles to describe the ways securities
change hands.
Brokers
handle buy-and-sell orders placed by individual and institutional
clients in return for a commission or an annual asset-based fee.
Dealers
buy and sell securities for their own or their firm's account
rather than for a client. For example, if you want to sell shares,
a dealer might buy them for the firm. Dealers make their money
on the difference between what they pay to buy a security and
the price they can get for selling it. Frequently, dealers are
also described as
broker-dealers,
since they may fill both roles.
Traders,
also called registered or competitive traders, buy and sell securities
for their own portfolios. The term trader also describes employees
of broker-dealers who handle the firm's securities trading.
