Small Trader

Dictionary Says

Definition of 'Small Trader'


An options or futures trader holding or controlling positions that are below the required reporting thresholds specified by the relevant exchange or Commodity Futures Trading Commission (CFTC). A small trader also refers to traders or small institutions whose trading volumes are quite low. In certain jurisdictions, the term "small trader" refers to businesses and suppliers whose sales do not exceed a certain level in each taxation year.

Investopedia Says

Investopedia explains 'Small Trader'


For example, in Canada, a business whose annual sales do not exceed C$30,000 may be classified as a small trader, which may make it exempt from collecting and remitting the Canadian Goods & Services Tax (GST).


Reporting thresholds set by the CFTC differ for option and futures contracts on various assets and commodities.


The Commitments of Traders (COT) report released every Friday by the CFTC groups the size and direction of all positions taken in a particular commodity by three categories of futures traders - commercials, non-commercials and non-reportable. Commercial traders hold positions in the underlying commodity, and use futures or options contracts to hedge their exposure. Non-commercial traders do not own the underlying commodity, and only hold positions in futures or options contracts, presumably for speculation.


The non-reportable category combines positions of small traders; this figure is derived by subtracting total long and short reportable positions from total open interest. As such, the total number of small traders grouped in this category and their classification - whether commercial or non-commercial - remains unknown.



comments powered by Disqus
Hot Definitions
  1. Closed-End Fund

    A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.
  2. Payday Loan

    A type of short-term borrowing where an individual borrows a small amount at a very high rate of interest. The borrower typically writes a post-dated personal check in the amount they wish to borrow plus a fee in exchange for cash.
  3. Securitization

    The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors.
  4. Economic Forecasting

    The process of attempting to predict the future condition of the economy. This involves the use of statistical models utilizing variables sometimes called indicators.
  5. Chicago Mercantile Exchange - CME

    The world's second-largest exchange for futures and options on futures and the largest in the U.S. Trading involves mostly futures on interest rates, currency, equities, stock indices and agricultural products.
  6. Private Equity

    Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity.
Trading Center