Traders play a vital role in the futures markets by providing liquidity. While futures are designed primarily to assist hedgers in managing their exposure to price risk, the market would not be possible without the participation of traders, or speculators, who provide a fluid market of buyers and sellers. Speculators provide the bulk of market liquidity, which allows the hedger to enter and exit the market in a more efficient manner.
In summary, the two main categories of traders are hedgers and speculators. Hedgers are those who use the futures market to manage price risk. On the other hand, speculators are those who use the futures market for the profit motive. As such, the speculator assumes a market risk for the potential opportunity to earn a profit. Futures traders can also be categorized in a number of other ways. There are full-time professional traders, part-time traders, individual traders who trade on the forex trading floor. Each of these market participants plays an important role in making the markets efficient places to conduct business.
Retail Traders
The vast majority of speculators are individuals trading off the floor with private funds. This diverse group is generally referred to as the “small speculator.” With the growing movement from currency trading on the floor to the computer screen, the small speculator is becoming more of a force in futures trading. Also, with computer-based trading, leveling the playing field between the different types of traders has become a reality.
Local Traders
Perhaps the most visible and colorful speculator is the professional floor trader. Also referred to as locals, the floor trader trades for his/her own account on the floor of an exchange. Locals are usually more interested in the market activity in the trading pit as opposed to the market activity in the underlying market fundamentals. With the popularity of electronic trading sweeping the industry, a trader who operates in a fashion similar to a floor local has emerged—the “electronic local.” An electronic local will trade using the same method as the local except they do so through the internet and a computer rather than in the trading pits.
Proprietary Traders
A trader who works off the floor for a professional online forex trading firm is known as a proprietary trader. These “upstairs” traders are employees of large investment firms, commercial banks, and trading houses typically located in major financial centers. This group has a number of different online currency trading objectives. Some engage in speculative trading activity, profiting when the market moves in their direction. Such proprietary traders are compensated according to the profits they generate. Other proprietary traders manage risk, hedging or spreading between different markets—both cash and futures. They do so in order to insulate their business from the risk of price fluctuation as well as to exploit the differences and momentary inefficiencies in market-to-market pricing.
Sigma Services
As a professional online trading service Sigma strives to give an eminent beyond comparison of professional and individualized trading services, Sigma also provides several facilities for all kinds of traders.
Sigma helps private and institutional clients achieve their trading goals by offering an inclusive forex trading package, along with the state-of-art trading platform, real-time news and wireless access. We relegate to meeting and exceeding our customers' expectations with the utmost professionalism and integrity.
Sigma provides appropriate services satisfying the needs of all business partners’ specified requirements. A client's profit is our success and a client's loss is a significant call of action for us, we consider every client as a special case and a partner.
Sigma's Customer Support is our business core, as we provide 24/7 customer support. We keep in touch with all our clients to make sure that we are on the right pass.
