Old business adage: the first one to speak in a negotiation loses. Well, if everyone followed this rule, business meetings would devolve into silent staring contests. Maybe that'd be an upgrade from the graph-laden, jargon-studded PowerPoint presentations that mark most business meetings. But we're not here to judge.
Anyway, in truth, someone has to speak first in a negotiation. In the world of markets, that person gets labeled "the aggressor." This might be true in many business scenarios, but now we're speaking specifically of trading, where the term "aggressor" exists more as a technical definition and less as a synonym for the hind portion of a horse.
In trading, such as in commodity and futures markets, the aggressor initiates the trade, indicating whether he or she is buying or selling, and how many units are included. This order goes to a dealer and then puts it out onto the market. There, it is matched with people on the other side of the trade.
So an aggressor looking to sell 1,000 barrels of oil will send the order to a dealer. The dealer will match with buyers looking to receive 1,000 barrels of oil. A price is reached and the transaction is completed. Repeat millions of times each day, and that makes up the financial markets we see covered on CNBC and Bloomberg.
