Before you opt for any stock market investment, you can check this guide to learn more about dealers, investors, and traders in securities. You will also get to know about Securities Transaction Tax and many more. Â
What is an Investor?
An investor is an individual who would purchase and sell securities anticipating that the securities would appreciate and produce returns such as dividends or interests. To keep it simple, the investor would buy a security and hold it for personal investment for some time.
Investors come with different budgets, risk tolerances, and timeframes. Some investors focus on low-risk investments for conservative gains. Others might be willing to take greater risks for larger profits.
Who is a Dealer?
Security dealers refer to individuals or firms that are involved in transactions in the security market. They are primarily responsible for the following functions:
- Guiding companies with the issue of new securities via the market placement and underwriting of new security issues
- New or outstanding security trading from individual accounts
The dealer often refers to both the corporate persons and the individual. An individual dealer participates in purchasing, offering, or selling securities for their account. But corporate dealers include investment banks, broker-dealers, clearing agencies, and many more involved in the same activities.Â
Before you learn about the world stock market, you must know that individual dealers are subject to regulation under federal securities laws. Other than the registration requirements, they are also not allowed to participate in specific transactions before getting approval.Â
Who is a Trader?
A trader is an individual who is thought to be buying and selling securities for accounts. Under some specific circumstances, a trader can also be regarded as a business if they do not hold an inventory or maintain customers. The IRS may consider you to be in a trader business in securities if your activity is substantial. You want to profit from daily market movements or continually or regularly practice the activity.
What is Security?Â
Security is considered an item representing ownership interests in other things. Examples include mutual funds, stocks, bonds, commodities, currencies, ETFs or real estate. Securities are often traded on exchanges and over-the-counter markets.Â
What is STT or Securities Transaction Tax?
If you are an investor in stock, you must know about STT, Securities Transaction Tax. This will be applied to both traders who carry out transactions and investors who have been in the share market for a long time. The Securities Transaction Tax will apply to equity stocks bought or sold via a stock exchange.
Bottom Line
Before you purchase any stocks or securities or know more stock market news, you must know the differences between dealers, investors, and traders. Hire an experienced broker if you want to start investing in the stock market.