Different Types of Stock Trading Investors
Just as there are a variety of ways to begin stock trading, there are also different types of investors who make trades in the market on a daily basis. Which type of investor do you want to be? Your choice will depend on your personal comfort level with risk, and your knowledge of how the stock market works. Here are a few different types of stock trading investors – what they are called and what makes them unique from each of the other types of investors:
Short Term Stock Traders
Some of the fastest stock trading investors are called “short term traders”. These investors buy and sell stocks in as little as a few minutes time! They minimize their trading risks by keeping the stocks for such a short period of time, therefore minimizing the risk of the stock price decreasing before they sell it. The profits earned from short term stock trading is also minimal, however, since their isn’t much time for the value to increase either, so short term stock traders grow profits slower than other types of investors.
Day Stock Traders
A day trader is an investor who buys and sells all different kinds of stocks and currencies within the same day. If the stock is purchased today, it is sold today before the markets close. The trick is to try and buy a stock when it’s at it’s lowest price and to sell the stocks at the time of day when they are at their highest price. There are two types of day traders: retail day traders and institutional day traders.
Retail day traders are investors who normally work by themselves or with just one or two other stock traders. Retail day traders use their own money and capital to make their trades.
Institutional day traders work for financial institutions and because of their connections with these institutions, they have access to more resources like high-tech software to analyze trading decisions, a direct line of access to data centers, and more cash to work with at any given time.
Long Term Stock Traders
The investors who are in it for the long haul are called long term stock traders. They use strategies which aren’t looking for quick wins. Long term stock trading investors know that over a period of time, the stock market will rise and fall, and they are positioned to ride the “wave” until they reach their investment goals. They don’t veer off their chosen path for the next big company, hoping to buy a stock just before they hit it big – instead, they select stocks based on their potential for steady and long term growth.
Each of the different types of stock trading investors has it’s own set of advantages and disadvantages. You should pick the type of investing that you are most comfortable with for your own situation, considering the levels of risk associated with each type of stock trading investing.