Players

Pension FundsPooled investment fund with the objective of providing retirement funds to its participants
Insurance CompaniesProvide life insurance and casualty insurance to its clients
Investment Funds"open-end" (mutual funds) have a floating number of outstanding shares. The value of which is based on the Net Asset Value "closed-end" (investment trusts) have a fixed number of shares typically traded on major exchanges
Commercial BanksClearing banks offer a full banking service to individuals and businesses
Building SocietiesCalled Savings & Loans in the US, take deposits and lend money mainly for house purchases
Investment BanksCorporate Finance
 Venture Capital and M & A
 Securities and FX Trading
 Portfolio management
 Issuing new securities
 Guarantee promissory notes, provide acceptance credit
Securities HousesStockbroking companies that have not been taken over
Central BanksControl money supply and interest rates
 manage national debt
 banking supervision
 note and coin issue
 Lender of last resort
Discount Housesoperate the "discount market"
 underwrite the weekly sale of treasury bills
 market maker in short-term financial institutions
Brokers 

Types Of Traders

There are two types of traders either commission brokers or locals.
Commission brokers are following the instructions of their clients and charge a commission for doing so.
Locals are trading on their own account.
These two types of trader can be put into three categories


Hedgers - they are trying to reduce the risk associated with any adverse price movements in the price of the underlying. A hedger normally owns a quantitiy of the underlying
Speculators - they are trying to make money from the movements in the price of the underlying
Scalpers - holding positions for very short periods of time (often minutes), trying to profit from small changes
Day Traders - holding positions for less than one trading day
Position Traders - holding positions for long periods of time, trying to profit from major movements in the market
Arbitrageurs - they are trying to make a riskless profit by simultaneously entering into transactions in two or more markets.




Hedging

There is a fundamental difference between the use of forward contracts and options for hedging: Forward contracts are designed to neutralise risk by fixing the price that will be paid. Option contracts just provide insurance, however they can benefit from favourable price movements. This obviously costs a premium


Speculating

There is an important difference between speculating using futures and options. Using futures the potential loss or gain is very large. Using options, no matter how bad things get the loss is limited to your premium.


Arbitrage

Arbitrage is sometimes possible when the futures price of an asset gets out of line with its cash price. Arbitrage opportunities do not last long.



Execution Trader

An execution trader is someone who is executing fund managers trades in the market and trying to find them the best price.



Fund Manager

Someone who manages small funds is called a fund manager



Portfolio Manager

Someone who manages the assets for a large institution is called a portfolio manager



Chief Investment Officer (CIO)

Someone responsible for the management of all the assets of a large business is called the chief investment officer




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