Stock market tradersStock market traders can be quite profitable. But there are a lot of different trading types out there. Each new person looking to make money in the market should decide for themselves which type of trader they are and perfect that strategy.
Below is detailed view of the 6 major trading types. By reading all you can figure out which one fits your personality the best. 1. Option seller. Instead of being one of the many people gambling by buying stock options these traders become the house. They take advantage of the fact that 80% of options expire worthless by selling out of the money option. No other traders have as high of a probability of being right as they do and they take advantage of it. Their goal is to make a consistent 5-10% a month off of their money. 2. Swing traders These are traders who are looking for quick moves in the market. They have the fast profit mentality, get in get out. There is no limit to how much a swing trader can make, especially if you use options. However with such a short timeframe these traders will have many wins and losses. They need to be strict on risk management and having a good risk to reward ratio to be successful. 3. Trend traders These are traders that can have a longer term approach to trading. They will try to find a great up trending stock buy it and ride it until the trend changes. After all if a stock keeps going up wouldn’t it be great to just buy it and let it double, triple, do what it does. Because up trending stocks go through stages of higher highs and higher lows these traders should have a loose stop and should not be worried about outside factors such as their stock being overextended, as long as the stock is still going up. 4. Day traders. Every day the markets move. Up or down. The job of a day trader is to capture a big part of the move. They want to make money no matter what it happens. In fact a day where the markets crashed can be a good day for a day trader because it made a big move which gave them a chance to make a bigger profit. Markets do have a tendency to gap in between days. That is why it is considered a strategy to exit all of their trades before the day ends. 5. Break out traders are people who are looking for strong stocks. They buy when a stock has just broke out and follow it up. Because breakouts on high volume are normally a strong buy signal especially in bulls markets these traders can sometimes find stocks that move astonishing amounts in short periods of time. These traders often have their own set rules to help determine if a breakout trade is a false signal or a great buy. They may decide to add fundamental analysis or other indicators to help weed out breakouts that produce false signals. 6. Fundamental traders. These are traders who try to predict the near term movements of the stock based on how the company is doing. They may try to buy strong stocks after a pullback and vice versa. While fundamental analysis can be a great long term approach to the market it loses its strength in the short term. These traders may decide it is best to combine fundamentals with one of the other strategies like breakout trading or trend trading. All and all there are many different strategies. It is not a one size fits all market. Anyone looking join the list of stock market traders and make money in the short term should decide which strategy or strategies work best for them. Already know your trading type?Have you already found out what type of trader you are? Share with us how you like to trade/invest.
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