Noncommercial Trader

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.

BREAKING DOWN '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.

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RELATED FAQS
  1. What is the difference between speculation and hedging?

    Learn about speculation and hedging, the difference between them, and how traders and investors speculate and hedge. Read Answer >>
  2. Do speculators have a destabilizing effect on the financial system?

    A speculator is anyone who trades derivatives, commodities, bonds, equities or currencies with higher-than-average risk in ... Read Answer >>
  3. Which of the following would be considered a short hedge ...

    The correct answer is a) Long the commodity and short the futures Read Answer >>
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    Learn what items futures may be purchased for, what a futures contract is and discover how the futures markets have greatly ... Read Answer >>
  5. Why do companies enter into futures contracts?

    Learn how companies use futures contracts for the purposes of hedging their exposure to price fluctuations as well as for ... Read Answer >>
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