Dealers and brokers

Whilst we all have some idea of what a dealer is, and also what a broker is, what is the difference? Are they the same, or different concepts?

It's a good question and one that confuses many. They are indeed distinct ideas.

A dealer is someone who buys and/or sells from their *own* account, whilst a broker is someone who acts as an *agent* on behalf of, and usually at the specific request of, one of their clients, and in the process they usually take a commission for performing the trade.

Therefore whilst for a broker the money comes from the commission of making the trade, for a dealer the profit will come if they have performed a good trade and are able to sell at a higher price in the future, for instance most straightforwardly by buying a stock low and selling it high.

Related Articles

Dormat account
Business Plan
Depression
Market research
Deregulation

More Financial Words and Vocabulary Explained