In this Article we will talk about different types of traders. There are two main categories of entities: stock traders and stock investors. For various occupations, several approaches are employed.
Stock investors are entities or individuals who use their own money to trade in the stock market in the expectation of profitable returns.
Stockbrokers are entities or individuals who engage in the trading of stocks or securities either for themselves or on behalf of others.
Stock traders are typically professionals who buy and sell stocks to profit from short-term price unpredictability with transactions ranging from a few hours to a few weeks.
They are concerned about the following:
- Price Patterns: When a trader examines the past price movement of a stock to predict the future price, it is called technical analysis.
- Supply and Demand: A trader keeps a close eye on all transactions within the day to see where the stock price is headed.
- Market Emotions: Traders also play on investor emotions using techniques like fading.
- Supporting traders: A certain type of traders called market makers are hired to supply liquidity through quick trading.
Approaches to Stock Trading:
Scalping: A trader who makes a lot of trades in a day and intends to scalp a portion of the profit from each trade using bid-ask spreads
Technical Trading: These kinds of traders are trained to watch charts and graphs closely to find the trend in the market and invest accordingly.
Fundamental Trading: This trading is based on fundamental analysis that takes into account corporate events such as forecast or actual earnings report, acquisitions, etc.
Swing Trading: Basic traders who hold their positions for more than 24 hours are known as swing traders. To make a decent profit, they have to hold on to the stock because any change in the company’s fundamentals usually takes days to weeks.
Intraday Trading: A share that is bought on a given day must be sold or squared off by 3:00pm on that day.
Momentum Trading: Traders who find stocks that move consistently and significantly up with high volume. These traders trade it to get high profit.