Proprietary Trading

Filed Under »

	Definition of 'Proprietary Trading' When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than from commissions from processing trades.
	Investopedia explains 'Proprietary Trading' Firms that engage in proprietary trading believe that they have a competitive advantage that will enable them to earn excess returns.

Related Definitions

Trade

A basic economic concept that involves multiple parties participating in the voluntary negotiation and then the exchange of one's goods and services for desired goods and services that ...
Read More »
Commission

A service charge assessed by a broker or investment advisor in return for providing investment advice and/or handling the purchase or sale of a security. Most major, full-service ...
Read More »
Soft Dollars

A means of paying brokerage firms for their services through commission revenue, as opposed to through normal direct payments (hard dollar fees). The investing public tends to have a ...
Read More »
- Hard Dollars
  
  Cash fees or payments made by an investor or customer to a brokerage firm in return for their services. Hard dollars differ from soft dollar payments because soft dollar payments are ...
  Read More »
- Broker
  
  1. An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. 2. The role of a firm when it acts as an agent for a customer and ...
  Read More »
- Prop Shop
  
  A proprietary trading group that usually trades electronically at a physical facility. Prop shops supply their traders with the education and capital resources to engage in a large ...
  Read More »
- Volcker Rule
  
  Trading restrictions placed on financial institutions. The Volcker rule separates investment banking, private equity and proprietary trading (hedge fund) sections of financial ...
  Read More »

Fee-Based Brokerage: Will They Work For You?

Learn the pros and cons of this type of investing and whether it will work for you.
Read More »
Paying Your Investment Advisor - Fees Or Commissions?

The way a professional is compensated can affect quality of service. Learn more here.
Read More »
Don't Let Brokerage Fees Undermine Your Returns

Smart investors don't give away more money than necessary in commissions and fees. Find out how to save.
Read More »
- Traders And Investors' Roles In The Marketplace
  
  Discover how these two groups work together to keep the market functioning properly.
  Read More »
- Quit Your Job To Trade Stocks?
  
  Ready to quit your day job and become a full-time trader? These tips will help you determine your area of expertise.
  Read More »

Disbanding The Euro	Is Bank Of America In Danger?		The Greatest Currency Trades Ever Made	The Enron Collapse: A Look Back
	Day Trading Strategies For Beginners	The Biggest IPO Flops	How HELOCs Can Hurt You