Definition of "Dealer"

An individual or firm in the securities business who acts as a principal rather than as an agent in a specific transaction. Principles buy and sell securities for their own account and risk. A dealer's profit or loss is derived from the difference between the price he/she pays for the security and the price he/she receives when selling the security to a customer. Because most individuals and firms act as both brokers and dealers, the term broker-dealer is commonly used.