Simple English definitions for legal terms
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A discretionary account is when a customer gives a broker permission to buy and sell stocks or other investments without having to ask for permission every time. The broker uses their own judgment to make decisions on behalf of the customer.
A discretionary account is a type of account that allows a broker to buy and sell securities or commodities on behalf of a customer without first obtaining the customer's consent. The broker has the authority to make decisions based on their own judgment and expertise.
For example, if a customer has a discretionary account with a broker, the broker can make trades on their behalf without having to ask for permission every time. This can be beneficial for customers who trust their broker's expertise and want to take advantage of market opportunities quickly.
However, it's important for customers to understand the risks involved with a discretionary account. Since the broker has the authority to make trades without the customer's consent, there is a potential for the broker to make decisions that may not align with the customer's goals or risk tolerance.
Overall, a discretionary account can be a useful tool for experienced investors who trust their broker's judgment, but it's important to carefully consider the risks and benefits before opening one.