The sell side of the trading industry includes dealers and brokers who provide exchange services to the buy side. Both types of traders help buy-side traders trade when they want to trade.
Dealers accommodate trades that their clients want to make by trading with them when their clients want to trade. Dealers profit when they buy low and sell high.
In contrast, brokers trade on behalf of their clients. Brokers arrange trades that their clients want to make by finding other traders who will trade with their clients. Brokers profit when their clients pay them commissions for arranging trades with other traders.
Many sell-side firms employ traders who both deal and broker trades.These firms therefore are known as broker-dealers or dual traders.
The sell side exists only because the buy side will pay for its services. We therefore must understand why the buy side trades before we can understand when the sell side is profitable.
