Whether you’re a seasoned investor or new to the stock market, no two investors are alike. In fact, we all have unique investing personalities and this is reflected in the way we approach the markets and trade equities. The more you understand what kind of investor you are, the better you’ll be able to set goals, trade, and evaluate your progress. The trading professionals at Learn-To-Trade.com can help you develop your own trading strategy. Below are four of the most popular types of investors.
Buy and Hold Traders
A buy and hold trader takes a long-term perspective to investing. Long-term traders don’t worry about the short-term, daily, weekly, even monthly fluctuations. They’re more concerned about the long-term appreciation and what the stock will be worth in five years, 10 years, 15 years, or longer.
Investing in stocks that will appreciate over the long run involves a lot of research; this includes understanding the broader sector, pouring over a company’s fundamentals (financial information, including quarterly results, balance sheet, income statements etc.) and determining if it’s worth adding to your portfolio.
Day trading is not for the faint of heart. Day traders are the opposite of buy and hold investors. Instead of buying a stock and holding it for years, they buy a stock and trade a stock daily, in some cases, many times a day.
Instead of looking for long-term appreciation, they will make many trades, taking advantage of small gains. It’s not uncommon for a day trader to make 20 or 30 trades in a day. Some will even place more than 100 trades a day.
Day traders don’t really care what a company does or anything about their financial positions. Day traders are more concerned with a company’s technicals, that is, they believe the chart patterns, volume, current and past price performance can help predict what the future price will be.
Option traders are experienced and have a lot of confidence. That’s because options can be very complex. Options, more commonly referred to as stock options, are based on equities, and used by investors to hedge their bets (limit losses), generate more income, or both.
Commonly traded just like stocks, options are a contract between two parties. It gives the buyer a right, but not an obligation to buy—or a seller a right to sell, but not an obligation to sell—a financial instrument at a certain price and time.
To be a successful options trader, you need to understand the markets, business conditions, and conduct a lot of research. You also need to have a solid understanding of a company’s technicals. Options have a limited shelf life. If an investor doesn’t watch their investment closely, they could lose everything.
The largest financial market in the world is not stock and bonds, it’s currency trading. More commonly referred to as Forex (foreign exchange), Forex traders buy and sell one currency for another, taking advantage of small fluctuations.
Like day trading, Forex traders make numerous trades each day, profiting off small price gains and losses.
The top four traded currencies are US dollar (USD), European Union Euro (EUR), Japanese Yen (JPY) and Great Britain Pound (GBP). While the majority of all Forex trading involves these four currencies, you can trade any combination of currency you like.
To be a successful Forex trader you need to know how to read and interpret the factors that influence a currency’s price moves. And by that, we mean any and all factors. Financial reports, political tensions, sporting events, and even weather conditions can make a currency fluctuate. Where the stock market is only open for a set number of hours each day, the Forex market is going 24/7.
Learn-To-Trade.com’s Stock Market Trading Course
Investing is risky. But the more you know, the less risky it becomes. With the right guidance and skills, you can learn how to trade like a professional.
Learn-To-Trade.com is Canada’s oldest and leading provider of stock market trading courses. Regardless of your skill level, our instructors will teach you proven trading strategies that can help you profit no matter the markets are doing.