Local

A "local" is an independent trader who buys and sells futures contracts on the floor of an exchange purely for their own account, using their own money, rather than executing trades on behalf of clients. The term comes from the old open-outcry trading pits, where these traders were physically "local" to the exchange floor, standing among brokers who were filling orders for banks, funds, and other outside customers.

Locals typically trade in and out of positions very quickly, sometimes holding a contract for only seconds or minutes, aiming to profit from small price movements and from the natural back-and-forth of buy and sell orders flowing through the pit. In doing so they act as informal market makers, providing liquidity by being willing to take the other side of a trade when a public order arrives, even though they have no obligation to do so. Their profit comes from the spread between buying and selling prices and from reading short-term shifts in order flow.

The nuance that confuses people is that a local is not the same as a floor broker. A broker executes orders for other people and earns a commission or fee; a local risks their own capital and keeps (or loses) the profit or loss themselves. Some individuals did both at different times, which is why the original definition mentions "may sometimes also fill public orders" — but that dual role blurs the distinction rather than defining it.

With the shift from open-outcry pits to electronic trading, the physical pit local has largely disappeared, but the concept survives in spirit: many electronic day traders and scalpers who trade futures for their own account, providing short-term liquidity, are described informally as trading "like a local," even though they are sitting at a screen rather than standing in a pit.