Buying Shares – Chapter 9: What kind of a Trader are you?

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Updated: Mar 5, 2019, 13:14 GMT+00:00

This is chapter number 9 out of 19. Read the rest: Read Buying Shares – Everything that you Wanted to Know but were too Scared to Ask – Chapter 1:

Buying Shares – Chapter 9: What kind of a Trader are you?

This is chapter number 9 out of 19. Read the rest:

There are different kinds of traders who tackle the markets differently. Some people for instance will trade professionally, during the day, some prefer to dabble in the markets and it is not their main source of income, others will buy shares and leave for them for years as long term investors and others will buy and sell within a day- these are day traders.

On the whole, there are 3 different kinds of stock traders: Day Traders, Swing traders, and Position traders.

Position Traders

The position trader is perhaps the most common trader. The majority of investors fall under this category since they purchase a stock and hold on to it for an extremely long time. The position trader can keep hold of a stock from months to years in the anticipation that the stock will give them a return, also mutual funds and investment banks will look at the long term picture of a stock.

Excluding individual investors who keep hold of a stock sometimes even forgetting that they have possession of the stocks, institutional investors too take part in this type of trading.

The position trader depends greatly on using fundamental analysis to make a choice to buy or sell a stock ie. they will listen to the news on that company, and read the quarterly financial reports. They are further interested in looking at the economic strength of a company than using technical study to look at patterns and trends. They are also not concerned in any short-term fluctuations in the values of a stock.

Swing Traders

Swing traders in general hold on to a trading point from weeks to months. The swing trader tries to produce large profits from holding huge positions in a stock for an extended period and are considered as mid-term traders.

The swing trader depends on Fundamental investigation as well as technical study to make their trading decisions.

Day Traders

Position and Swing traders are no new thing, day traders however are becoming more popular over time as trading becomes much more accessible through every day technology. A day trader is focused on making short-term profits. He does not aim to keep a stock for over a day and exploits the stock market as a source of profits, not an investment. Day traders largely depend on technical analysis to make their trading decisions. They tend to close all of their positions before the end of trading day. This means that they are not susceptible to any bad news overnight which might affect their stock prices ie. a hurricane breaking out in the country where the product of that company is being manufactured.

Day traders are reliant on using technical study to back up their trades and are considered to be very important in keeping the market liquid.

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Table of Contents

Intro

Intro