How do floor brokers earn money?

How do floor brokers earn money?

• A. They earn a commission only when a trade profits for the trader.
• B. They earn money from every buy and sell order processed.
• C. They earn a fixed hourly salary regardless of trades.
• D. They earn money only on successful trades that close in profit.

Answer: (B)

The main idea is that brokers are paid for the service of executing trades. Each buy or sell order they process earns a commission or fee, which is typically a percentage of the trade value or a fixed per-trade charge. This means their income comes from the act of completing the transaction, not from whether the trader ends up profit or loss on that trade. The other scenarios—getting paid only if the trade profits, or earning a fixed hourly salary, or only on profitable trades—don’t reflect the usual practice, where the fee is tied to the transaction itself.

The main idea is that brokers are paid for the service of executing trades. Each buy or sell order they process earns a commission or fee, which is typically a percentage of the trade value or a fixed per-trade charge. This means their income comes from the act of completing the transaction, not from whether the trader ends up profit or loss on that trade. The other scenarios—getting paid only if the trade profits, or earning a fixed hourly salary, or only on profitable trades—don’t reflect the usual practice, where the fee is tied to the transaction itself.