The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.
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What is Dealer | Definition and Meaning |
What is over-the-counter trading? Learn more about forex Discover what forex is and how you can trade it. Cons of OTC trading The unregulated nature of OTC trading means that there is a higher risk of a counterparty defaulting on any given agreement.
Build your trading knowledge Discover how to trade with IG Academy, using our series of interactive courses, webinars and seminars. Learn more What is CFD trading? Learn to trade News and trade ideas Trading strategy. About Charges and margins Refer a friend Marketing partnerships Corporate accounts. Dealers are one of the key figures in the trading realm. They can be found in all markets — shares , bonds , currencies and commodities — providing investment services to investors.
By offering buy and sell prices, dealers provide liquidity and help boost long-term growth in the market. 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.
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A dealer is a firm or individual who acts as a counterparty for both buyers and sellers. They set bid and ask prices for the given security, and trade with any investor who is ready to accept these terms. Dealers typically set bid prices lower and ask for prices higher than the market, seeking to buy assets cheap and sell them for more. The profit the dealer makes is the spread between those prices. In return, the dealer assumes counterparty risk. Sometimes, securities that are sold by dealers are known as over-the-counter trades OTC.
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. The foreign exchange market is the one market mostly operated through dealers, with currency exchanges and banks acting as the dealer intermediary. In some markets, dealers may be contacted directly by private investors, in others, they may conduct business only through intermediaries, such as brokers.
In real life, most modern dealers also act as brokers.
Foreign exchange market
These are referred to as broker-dealers. Broker-dealers may vary in size: from small independent firms to business units or subsidiaries of large investment banks, commercial banks or investment companies. Over the past few years, the profitability of dealers has been challenged by several factors, such as industry consolidation, increased technology requirements to stay up to date with the rapid pace of markets and a heightened regulatory environment, which has led to an increase in compliance costs. Learn more about trading commodities. View all articles. Spread betting TradingView. Indices Forex Commodities Cryptocurrencies.
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