Stock Traders

Types of Stock Traders

There are several different types of traders that participate in trading in the stock market, but in today’s article we will focus on three. We will review day traders, swing traders and position traders.

Day Traders – When trading stock these stock traders will buy and sell stocks within a single trading day. The goal is to capitalize on small price fluctuations in highly liquid stocks through the use of various trading strategies. These traders actually provide a lot of the market’s liquidity and they must have significant funds in their trading account. These traders have a thorough knowledge about trading and how the stock market works. These investors use those tools associated with technical analysis and they base their trades on price trends and patterns.

Swing Traders – Swing traders trade within a short time frame as well however they hold their stocks anywhere from a few days to a few weeks. These traders also take advantage of small price fluctuations in the market and they base their trades on technical analysis rather than fundamental analysis. They use various technical indicators and they look for those stocks that have short-term price momentum. Again, they are not interested in the intrinsic value of stocks and don’t study the fundamentals associated with different stocks.

Position Traders – These investors will hold a trade for a longer period of time such as months to years. They study the fundamentals associated with a particular stock instead of focusing on short term price movements. They use fundamental analysis rather than technical analysis but some may use weekly or monthly charts to identify trends. The goal is to profit from the long term trend rather than short term price movements.

Please also read about Japanese Candlesticks which is a trading strategy used by some of the world’s most successful traders along with other forms of technical analysis . It is the fastest way for new investors to quickly and accurately read stock charts when trading stock . Once you are comfortable with the major candlestick signals, expand your expertise by learning the secondary Candlestick Patterns. Combine these with your favorite technical indicators , such as the moving average, and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds.