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What is the difference between principal vs agency trading?

In the case of agency trades, however, traders are executed solely on behalf of the clients. This means that the risk of the trades are borne by the individual investor and not the stockbroker. Another distinction between principal vs agency trading is the matter of who they are largely conducted for.

What is principal trading & agency trading?

In the world of financial markets, two prominent approaches to executing trades are principal trading and agency trading. Principal trading involves brokerages using their own inventory of securities to complete customer trades, allowing them to profit from the bid-ask spread.

What are principal and agent trades?

On other occasions, you are only making a trade with your broker. These two main types of trades are known as principal and agent transactions. Principal trades involve a brokerage's own inventory of securities, while agency trading involves trading with another investor, potentially at another brokerage.

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Risk warning: Digital asset trading is an emerging industry with bright prospects, but it also comes with huge risks as it is a new market. The risk is especially high in leveraged trading since leverage magnifies profits and amplifies risks at the same time. Please make sure you have a thorough understanding of the industry, the leveraged trading models, and the rules of trading before opening a position. Additionally, we strongly recommend that you identify your risk tolerance and only accept the risks you are willing to take. All trading involves risks, so you must be cautious when entering the market.

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