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Simple English definitions for legal terms
trader
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A quick definition of trader:
A trader is someone who buys and sells things to make money. They might sell things in the same way they bought them, or they might change them to make them more valuable. Traders can also buy and sell stocks or commodities, which are things like gold or oil that people trade to make money. If someone is a trader for their job, they have to pay taxes differently than someone who just sells things once in a while.
A more thorough explanation:
A trader is a person who buys and sells goods or securities for profit. The term can have different meanings depending on the context:
A trader can be someone who buys goods from a supplier and sells them to customers at a higher price to make a profit. For example, a clothing store owner is a trader.
A trader can also be someone who buys and sells commodities, such as oil, gold, or wheat, in anticipation of making a profit. This type of trader may work for a company or trade on their own account.
A trader can also be someone who buys and sells stocks, bonds, or other securities on a stock exchange. This type of trader may work for a brokerage firm or trade on their own account.
In U.S. income tax law, a trader is someone who deals in property as a business, making several purchases and sales within a year. This is different from someone who sells assets held for investment. A trader may lose the right to defer capital gains by exchanging for another property.
Examples:
- A farmer who sells crops at a local market is a trader.
- A hedge fund manager who buys and sells stocks for clients is a trader.
- A day trader who buys and sells stocks within a single trading day is a trader.
These examples illustrate how a trader can work in different industries and contexts, but they all share the goal of making a profit through buying and selling assets.