What is Full Trading Authorization?
Full trading authorization is a level of trading authorization that grants an agent or broker the power to place orders, withdraw funds or make inquiries concerning a client's account. Written documentation must be completed by the client before an agent or broker can be given power of attorney over the client's account.
- Full trading authorization is a level of trading authorization that allows an agent the power to place orders, withdraw funds or make inquiries concerning a client's account.
- Full trading authorization is often used by investors who lack sufficient knowledge to engage in trading, or who lack the confidence to make major trading decisions.
- Full trading authorization can be suitable for investors who find the process of researching and monitoring trading activity to be too stressful or time-consuming.
How Full Trading Authorization Works
Trading authorization is often discussed when an investor enlists the services of a new broker or agent for the first time. At this point, the specific level of authorization the investor desires will be established and formally agreed upon.
Full trading authorization allows brokers to buy or sell securities on behalf of their clients, look into account activity or overall balances and extract funds for disbursement. In essence, an agent with full trading authorization is empowered with the authority to conduct all of the activities that the client themselves would be able to perform.
This level of authorization is often used by investors who may not have sufficient knowledge to engage in trading, or who lack the confidence to make major trading decisions on their own. It may also be preferred by investors who are busy and find the process of researching and monitoring trading activity to be too stressful or time-consuming.
Full Trading Authorization Considerations
Investors who approve full trading authorization must have the utmost confidence and trust in their agent or broker. This would likely only be a preferred option for investors who are not only trusting of their agent, but who also are comfortable relinquishing a significant amount of control over their own financial accounts and activities.
Investors who do not want to allow a broker to transfer funds from their accounts may consider limited trading authorization. This limits the broker's approved actions to purchasing and selling securities or account inquiries, and restricts them from accessing funds. The basic goal of granting an agent limited trading authorization is to allow them to initiate and perform transactions that will, ideally, be profitable for their clients.
This is a good option for investors who do not want or need their agent to seek approval for each and every trading move, but who do not want to share full control over every aspect of their account and financial activity. This provides the agent with greater flexibility, and the ability to react quickly to market changes while still giving the investor some peace of mind, since they have not relinquished complete control of their accounts.