Noncommercial Trader

AAA

DEFINITION of 'Noncommercial Trader'

A classification used by the Commodity Futures Trading Commission (CFTC) to identify traders that use the futures market for speculative purposes.

INVESTOPEDIA EXPLAINS 'Noncommercial Trader'

Generally, the category of noncommercial trader includes individual investors, hedge funds, and some large financial institutions. If noncommercial traders (speculators) have a substantial number of short positions, it can be inferred that this group of investors believes the price of the underlying asset is going to decrease.

RELATED TERMS
  1. Retail Investor

    Individual investors who buy and sell securities for their personal ...
  2. Hedge Fund

    An aggressively managed portfolio of investments that uses advanced ...
  3. Open Interest

    1. The total number of options and/or futures contracts that ...
  4. Futures

    A financial contract obligating the buyer to purchase an asset ...
  5. Commodity Futures Trading Commission ...

    An independent U.S. federal agency established by the Commodity ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
Related Articles
  1. Active Trading

    How Companies Use Derivatives To Hedge Risk

    Derivatives can reduce the risks associated with changes in foreign exchange rates, interest rates and commodity prices.
  2. Insurance

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  3. Fundamental Analysis

    Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger market exchanges.
  4. Options & Futures

    What is the difference between arbitrage and hedging?

    Dive into two very important financial concepts: arbitrage and hedging. See how each of these strategies can play a role for savvy investors.
  5. Economics

    What country is the world's largest coal producer?

    Producing nearly 50% of the world's supply, China is the world's largest global coal producer and a large force in global coal pricing and trade.
  6. Mutual Funds & ETFs

    How do hedge funds use short selling?

    Learn how hedge funds use short selling to profit from stocks that are falling in price. Explore different analytical techniques hedge funds employ to find investments.
  7. Investing Basics

    The Strange New World Of The Bitcoin Exchange Futures Market

    We explain the basics of the Bitcoin exchange and futures market.
  8. Mutual Funds & ETFs

    Can you invest in hedge funds?

    Read about what it takes to invest in a hedge fund, and learn how some investors find ways to indirectly capture a hedge fund's returns.
  9. Options & Futures

    A Quick Guide for Futures Quotes

    Here is a quick guide to futures quotes.
  10. Options & Futures

    Is short selling ethical?

    Understand the concept and practice of short selling, and examine the ethical questions that some investors raise in regard to this practice.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center