| Futures Trading Markets Floor Traders: |
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 Futures Trading Floor Traders:
Local people who buy and sell futures contracts or stocks on the floor of the exchanges are known as floor traders. The floor trader is similar to the market makers and specialists, they help provide liquidity in the market. Floor traders also can make trades on their own accounts, but unlike the market maker or specialists, the floor traders participating in the market are not known and fully understood.
Liquidity in the market, if a trade is placed and there is no speculator or hedger willing to take the other side of your order at or near the live futures market price. This is where the independent floor trader comes in and takes the chance, executes the trade opposite of yours, in the hopes that in seconds or minutes later they can sell at a profit. This type of trading is very similar to day-trading stocks, but with the futures markets the profit is tight and small, so trading futures knowing when to buy or sell futures and order execution is the key.
The floor trader who participates in trading futures or any stocks has no guarantees that they will make any profit on any trades they make. But in very competitive markets the floor trader can provide much needed liquidity in the market. Unlike the market maker or specialist, the floor trader is in no way obligated to take the opposite side of a trade / order or maintain liquidity in the market.
When hedgers and speculators enter in the market, they are buying futures contracts to try and protect themselves from future price increases or future market declines and make a profit either way.
Article By: PTC / David L. Lawrence
Level2StockQuotes.com
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