Stock Market Trader – Meaning, Focus, Trading Styles, Types of Trader & more

Know everything about Stock Market Trader or Share Market Trader here.

In ancient times, people love to gamble. Many believed one can become rich in a short span, and who would have disagreed?

If luck is with you, you can earn handsomely without putting literary any effort. Now, many people compare Gambling with Stock Trading.

Some even consider it “a rich man’s amusement.” Now, in reality, it not actually like gambling. We even protest against the statement.

Now, the question remains – what is Stock Trading, then? To answer that, we have to know certain elements that comprise the stock market.

Then we will highlight various aspects of Stock Trading and those who do that. So, sit back and go through this article, where we have explored all the significant segments about being a Stock Trader.

So, without further delays, let us jump in.

Stock Market Trader – An Overview

In simple terms, the Stock Market Trader or Share Market Trader invest money on various financial assets that a company offers.

If you buy some equity shares, you will, in a way, gain ownership to that particular company.  Now, of course, you can’t be a trader unless you sell the stocks you own.

So, as discussed in the introduction, Stock Trading is a calculated business, and not gambling, in any stretch of the imagination.

Now, you can be a Stock Trader who works for a financial company, where the company will have the ownership of the stocks while you are a representative.

The other way is you are the trader where you will have 100% ownership of the shares you own.

What you should know is that Stock Trading is a complicated process – both while you are trading and the steps to carry on the trading procedures.

Now, from a trader’s view, you won’t have to bother about how the stock exchanges carry out their operations.

However, we suggest you should know that too, but this article is all about understanding the role that you being a Stock Trader is playing here.

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What should be the focus of Share Market Trader?

In a broader sense, the Stock Market Traders as a whole are the soul of this entire trading operations. Everything depends on the overall performance of the Traders in a day-by-day manner.

Where the company focuses on the total number of share transaction and its unit price, you being a Stock Trader, should have two major goals while you trade:

Price Trends: If you wish to become a successful trader, the first thing that you should understand is the market trend; more specifically, the price at which you are either buying or selling the shares.

There are hundreds of tools by which you can get detailed stats on how a particular stock is doing over a period. You need to master the skill to guess whether the price will fall, rise, or hold.

The mark of a successful Stock Trader is doing this simple guessing consistently.

Supply & Demand: It is pivotal that you understand the concept of Supply and Demand thoroughly. Only then you can minutely observe the day-to-day trading.

It would be best if you improve your understanding of the price patterns. Meaning you should have the concept when the price can go up, and what causes it to drop.

In short, if you can harness the market movement correctly, the sky is the limit for you.

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Stock Trading Styles of Stock Market Trader

Stock Trading is a diverse process. There are loads of trading patterns that you can follow.

As success doesn’t have a fixed formula and works differently for everybody, trading shares can also vary from one trader to another.

However, everything has a core foundation of rules which all the successful individuals collectively create.

So, let us know about three such Stock Trading styles that can, not necessarily, but can work for you:

Informed Traders

One of the most convenient ways to get success is to follow other successful people, and replicate if possible.

Not everybody is a firm believer in this theory, but many do. Such is the case of any informed traders.

They are like the first benchers of the class, who follows the text-book minutely and play the percentage game.

The Informed Traders, therefore uses all the available tools and charts to gather information about a particular stock, observe the market trend and then trade stocks.

These traders take calculated risks and are usually happy with the ROI.

Uninformed Traders

Take the example of the first-benchers we just use and reverse the situation, what will you get? The back-benchers with who have limited knowledge but knows how to manage everything.

Such is the case for the Uninformed Traders, who many call them as Noise traders. They don’t follow any set principles but like to gather information from the Informed Traders.

However, there are millions of Uninformed Traders who are highly successful in most trades. So, being unconventional is not that a big deal in the stock market.

What matters is how much is the ROI, no matter how you are doing it.

Intuitive Traders

There are good students and bad students; and then, there are professors. So, consider the Intuitive Traders as professors in this domain.

They usually follow the set rules and ideologies that most traders should consider. But every now and then, they are not shy in taking calculated risks.

One thing is very subtle – every decision they take has a strong logic. Of course, they too take bad decisions, and for that, they pay the consequences as well.

However, that won’t stop the Intuitive Traders to make a comeback and do a successful deal.

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Difference between Individual Trading and Institutional Stock Trading

Individual Stock Trading represents you as a retail trader. Here, whatever form of financial assets you buy, you will be the sole owner of those.

Now, you may wish to invest a lump sum amount on buying company stocks, but there is no other ownership involved in this kind of investment.

The thought-process, while you buy or sell a stock, is not expansive and typically involves low-risk. However, it depends exclusively on you how much riskier deals you wish to participate.

Institutional Stock Trading, on the other hand, represent a business entity, where you are representing them.

If you are the person operating the trading of any financial assets, you are doing as a company employee, and therefore, you personally won’t have any ownership for those securities.

Typically, a large sum of money involved in Institutional Trading in the form of hedge funds, pension funds, mutual funds, and insurance companies.

However, there are no prohibitions on any forms of trading. Quite a bunch of people research before investing in a particular stock, which is usually calculated risks.

Please note if you are a part of Institutional Stock Trading, you generally don’t have complete control while you buy, sell, or hold the stocks.

What are the various types of Stock Market Trader?

Similar to most decisions-making, Trading stocks also has a variety of angles while to see a stock’s performance.

You may hold a bullish attitude, and your friend may adopt a bearish one while assessing the same piece of information about a company you both follows.

So, based on this aspect, we have categorized the Stock Traders:

Day Trader

Most Stock Traders follows a bullish or a bearish attitude while predicting what a stock’s performance would be.

The Day Traders, on the other hand, are open-minded while assessing stocks. Their thoughts are spontaneous and can decide instantly.

They value day-to-day trading over holding for a long time. That is why they are often called the Intraday Stock Traders.

Of course, these are high-risk deals, but they know that the ROI can be significant. The Intraday Traders typically deals in company shares, currencies, futures, and options.

Swing Traders

The Swing Traders are the patience-players in the game of Stock Trading. For them, preparation is the key.

While these traders know there are risks while you buy or sell stocks, but they trust the process. They monitor the market movement for days, weeks, or even months before they make their move.

In a way, a Swing Trader approaches Stock Trading as marathons, and not a sprint. Thorough research on a particular stock backs the risk they take.

So, most deals they make reflects a higher percentage of success.

Buy and Hold Trader

It is one of the most vintage Stock Trading strategies a trader can take.

The risk involved in this kind of trading is considerable low as they value stock with consistent performance over the one with an upward market trend.

The approach is simple – buy a reputed stock and hold it long-term. So, if there are any short-term price movements, they typically don’t bother.

It is an apparent bullish approach where they expect high ROI while they hold the stock for a long time.

Momentum Trader

A Momentum Trader usually does balanced deals. They approach neither bullish nor bearish attitude, as they are open-minded to various possibilities of Stock Trading.

Of course, they do a lot of research before investing; they follow market trends, act instantaneously. The risk factor while the trade is subjective and variable.

It depends on whether they adopt a long or short position. Market volatility is one of the significant aspects, which the Momentum Traders rate highly.

They like massive events where the stock’s price fluctuates. It enables them to buy or sell stocks are a higher profit.

KISS Trader

KISS represents a simple acronym – Keep It Simple, Stupid! As it goes, the KISS Traders like to keep Stock Trading a less complicated process.

Of course, they follow trends, and charts and stats, but typically like to take decisions on instincts.

The analogy is different from one Trader to another, depending upon how one approaches the situation.

Most KISS Traders are unpredictable as they don’t usually follow the rule-book. Their researches are unconventional, which only works for them.

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Difference between Stock Trader and Stock Investor?

When we are differentiating a Stock Trader and a Stock Investor, the core difference is tenure. Now, we have already explained a lot on the Stock Traders.

So, let us know a bit about Investors. You see, they plan to buy for the long term and let those shares yield dividends on top of the usual profit.

A Trader approaches with a simple motive – but stocks at a lower price and sell them at a higher price. The Investors, on the other, have don’t engage in the trading part.

They hold the shares as much amount of time they can until the company decides to pay dividends.

The approach of a Stock Investor typically doesn’t include the market trend. What they do bother is the Capital Growth ratio of a particular stock.

They want to mean the term “financial assets” while they invest. That is why they hold the stocks on a long-term. As mention earlier, that hold tenure can be five years or even a decade.

The risk that both the Stock Market Traders and Stock Investors take is pretty much the same. However, the amount would vary significantly.

As more time invested in holding the stock for a long time, the Stock Investors can incur a massive loss if things didn’t pan out the way they want.

Another aspect that you should know is Stock Trading is a sprint, while Stock Investment is a marathon. The scope to earn money applies to both.

However, they are different forms of races and have distinct challenges to face. You can be good in either form if you become a good player.

Share Market Trader – The Conclusion

Stock Trading can be simple or can be complicated. It depends on how you are approaching it. But then again, sometimes things are just not in control.

The stock market can crash down, and there can be infinite reasons for that. So, there is an element of luck involves in Stock Trading as well.

So, that concludes the complete summary on the Stock Market Traders.

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