What is Discretionary Authority?
Quick answer
Discretionary authority is the legal power to make trading decisions and place trades on someone else’s behalf without asking each time. Money managers have it over client funds; copy trading does not work that way. With RelayTrades you keep discretion: you choose what to follow and set the rules, and it is automation software, not a discretionary manager.
Discretionary authority is a legal concept about who gets to make the trading decisions. It is central to understanding how copy trading differs from having someone manage your money.
What discretionary authority means
When someone has discretionary authority over an account, they can decide and place trades on the account holder’s behalf without getting consent for each one. Investment advisers and money managers operate this way over client funds, and doing so generally requires registration and carries specific legal responsibilities. It means handing real control of your money to someone else’s judgment.
Why it matters in copy trading
Copy trading, done through your own account, is not discretionary management. You choose which strategy to follow, you set the sizing and risk limits, and you can pause or stop at any time, so you keep discretion over your own account. RelayTrades is automation software that routes the trades you have chosen to follow; it does not have discretionary authority over your funds and does not manage your money. That distinction is part of why copy trading through your own regulated broker is structured differently from a managed account.
Frequently asked questions
Back to the full copy trading glossary, or read the complete guide to copy trading.