Question:

Trading risk: Dealer or broker?

by  |  earlier

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Hi all, is investing with a dealer more risky than with a broker?

If yes, why?

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5 ANSWERS


  1. Every broker is a dealer.  The broker-dealer is the company and the functions are carried out by their representatives.  If you're dealing with one you are dealing with the other.


  2. I have personally never heard of a "dealer".

    I would recommend going through an online trading site like Scott trade or E trade.

    Good luck!!


  3. You normally deal with a broker. He/she will give investment advice. The dealer is normally an internal position at the brokers office. He/she just does the physical dealing with the market.

  4. There's two kinds of risk you need to be aware of:

    1. Fraud and scams. Disreputable firms that steal your money. The way to avoid these is to open an account with a firm that is a member of one of the well known recognized regulatory agencies such as the National Futures Association.

    2. Market risk. The risk inherent in any kind of trading.

  5. You should have provided more details to receive more accurate responses

    Depending on the product you are investing in, it is less riskier investing with a dealer than a broker if you are investing in fixed income or initial public offerings.  Dealers usually deal only with the street, (other broker/dealers) rather than the general public.  

    With fixed income securities dealers can buy large quantities and make them for available to the general public.

    If you're investing in equities, especially OTC traded securities, you would be better using a broker rather than a dealer.  You should never use a dealer if you are investing in any equity securities.

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