Types of Stock Traders
When discussing the different types of traders who trade stock, it is first important to understand what a stock trader is as opposed to a stock investor. Stock traders typically attempt to profit through short term stock trading that lasts anywhere from several seconds to several weeks. Equity is traded on the stock market through the use of technical analysis with the goal to profit from short-term price volatility. There are different types of stock traders that are later discussed in this article, but basically a trader is a person who buys and sells stocks in order to make a profit. Conversely, a stock investor purchases stocks to hold onto for a longer period of time, such as several months to years. Stock investors practice fundamental analysis and they participate as shareholders with part ownership to companies.
The major styles of trading discussed in this article include day trading (including scalping and momentum trading), technical trading, fundamental trading, and swing trading.
Day traders – day traders will typically buy and hold stock between a few seconds to a few hours. The goal is to get in and then get out by selling out of any particular stock for a profit as fast as you can. These types of stock traders do not hold stock overnight in order to prevent from losing out of their gains made that day.
Scalpers – This day trader makes tons of trades each day and their stock trading is restricted to quick and repeated buying and selling of a large volume of stock during a very short period of time. The goal is to earn a small per share profit on each transaction at a minimum risk by exploiting the bid-ask spread.
Momentum Traders – these traders look for stocks that move significantly in one specific direction on high volume, and they attempt to jump on the bandwagon to ride the momentum to their desired profit. These traders trade stocks that are in a moving pattern during the day. The goal is to buy stock at the bottom and sell it at the top.
Technical Traders – These stock traders constantly read stock charts and graphs. They watch the lines on these charts or graphs for signs of divergence or convergence used to indicate buy or sell signals.
Fundamental Traders – These traders trade stock based on fundamental analysis. Fundamental analysis look at things such as earnings reports, stock splits, mergers and acquisitions. They practice long-term investing and hold onto stock for several months to several years.
Swing Traders – Swing trading stocks is similar to day trading stocks, but swing traders hold their stocks longer. They also attempt to predict future price movements over the short-term but they hold stocks for more than one day, if necessary. Swing traders assume greater risk than day traders because they take a risk by holding onto stock overnight. Day traders, on the other hand, liquidate their stock at the end of each day.
There are many types of stock traders and many different methods available for traders to use. For those new to investing in stocks, be sure to research not only the types of trading that you can do, but also the different methods that you can utilize.
Market Direction: This past week of trading was a perfect illustration of how prices move, not on the basis of fundamentals, but on the perception of fundamentals. It is often asked whether any trading method could anticipate the markets price action of last week. When outside influences, such as government intervention, starts playing into the market, there is no trading method that can anticipate unforeseen actions. However, candlestick charts allow an investor to clearly and quickly analyze what investor sentiment has developed based upon unforeseen actions. This may sound like trying to catch the horse after it is out of the barn. But the big benefit of candlestick analysis is that the candlestick investor at least has a good idea which direction the horse is going.
The results of candlestick signals and patterns becomes a relatively predictable analysis. This is due to one simple factor! Investor sentiment reacts the same way over and over during price movements. There are different dynamics in investors minds when prices are going down. There are different thought processes in investors minds when prices are moving up. Sideways price movements also create common investor reactions. Candlestick analysis is merely the graphic depiction of what is occurring in investor sentiment. It does not take a rocket scientist to evaluate what a price trend "should" do based upon a reoccurring pattern.
An often asked question is what will we learn during a Candlestick Forum Online Training session. The information conveyed by both Rick and Steve has one solid fundamental element. It teaches the investor how to utilize the commonsense investment practices built into candlestick signals. That education includes recognizing the signals and patterns that have a high probability result. Steve illustrates the major signals and patterns that have the capability of producing extensive profits. More importantly, he educates investors to understand the psychology that created the signals and why they work the way they do. This information is an extremely powerful combination. It provides a full understanding of why prices move the way they do, as the professions think. This creates the analytical ability that can be used in any market conditions for the rest of your life. Rick's knowledge as an extremely strong dynamic for successful investing. Extensive research and practical use allows Rick to combine additional technical indicators to fine tune a successful trading strategy. The utilization of candlestick signals in conjunction with other indicators dramatically improves the probabilities of being in the right trade/position at the right time. Come join us on October 4 and 5, 2008. This today training seminar puts everything in a logical order. Once you have learned the nuances behind successful trading with candlestick's, you will be able to analyze any trading market that you would like to participate.
Member Chat Session tonight at 8 pm ET will be hosted by Rick.
The Candlestick Forum Team
Once taught only to Steve's private clients; now available on CD.