Proprietary Trading

Proprietary Trading Definition

Proprietary trading definition is the act of companies profiting directly from the market rather than working on a commission basis. Several companies who have a competitive advantage in an area of trade often do this.

Proprietary Trading Meaning

Larger companies who have expertise in a certain market usually perform proprietary trading. For example, an energy company will have extensive knowledge of how oil and gas will be traded. These companies use this advantage to their benefit. It can however get out of hand when a large company has the ability to manipulate the trading amounts. For example, Enron exuberated too much control over the trading energy numbers. If done correctly, then proprietary trading can provide major benefits to a company and provide some well made profits over time.

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