| A stock trader or a stock investor is an
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| | believe will increase in price aiming to
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| individual or firm who buys and sells
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| | sell it later with earnings. According to
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| financial instruments (such as stocks or
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| | the trading techniques and strategy
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| bonds) in the financial markets.
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| | adopted, or the investing profile of each
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| Stock Trader vs. Stock Investor
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| | individual, its trading style can be
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| The difference between stock traders and
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| | called value investing, growth investing,
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| stock investors is that stock investors
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| | day trading, swing trading, or trend
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| tend generally to buy great companies
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| | following.
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| (blue chips). They tend to invest for the
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| | Expenses, costs and risk
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| long-term and count upon compounded
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| | Trading activities are not free. First of
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| business growth to provide their returns.
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| | all, they have a considerably high level
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| Stock traders, on the other hand, usually
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| | of risk, uncertainty and complexity,
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| try to profit from short-term price
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| | especially for unwise and inexperienced
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| volatility. Sometimes they try to rely
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| | stock traders/investors seeking for an
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| upon the psychology of other investors.
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| | easy way to make money quickly. In
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| Individuals or firms trading as their
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| | addition, stock traders/investors face
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| principal capacity are called stock
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| | several costs such as commissions, taxes
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| traders or simply traders. The stock
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| | and fees to be paid for the brokerage and
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| trader is usually a professional. Many
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| | other services, like the buying/selling
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| people across the world can call
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| | orders placed at the stock exchange.
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| themselves stock traders/investors or
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| | According to each National or State
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| part-time stock traders/investors,
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| | legislation, a large array of fiscal
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| despite having another profession in
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| | obligations must be respected, and taxes
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| parallel with their regular trading
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| | are charged by the State over the
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| activities in the financial markets. When
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| | transactions and earnings. Beyond these
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| a stock trader/investor has clients, and
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| | costs, the opportunity costs of money and
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| acts as a money manager or adviser with
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| | time, the currency risk, the financial
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| the intention of adding value to his
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| | risk, and all the Internet Service
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| clients finances, he is also called a
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| | Provider, data and news agency services
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| financial adviser or manager. In this
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| | and electricity consumption expenses must
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| case, the financial manager could be an
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| | be added.
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| independent professional or a large bank
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| | Stock Picking
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| corporation employee. This may include
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| | Although many companies offer courses in
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| managers dealing with investment funds,
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| | stock picking, and numerous experts
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| hedge funds, mutual funds, and pension
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| | report success through Technical Analysis
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| funds, or other professionals in equity
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| | and Fundamental Analysis, many economists
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| investment and fund management. A very
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| | and academics state that because of
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| active stock trader who holds positions
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| | Efficient market theory it is unlikely
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| for a very short time and makes several
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| | that any amount of analysis can help an
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| trades each day is a day trader. Other
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| | investor make any gains above the stock
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| broad or specific designations for
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| | market itself. In a normal distribution
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| different kinds of stock traders include
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| | of investors, many academics believe that
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| the terms: speculator, hedger,
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| | the richest are simply outliers in such a
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| arbitrageur and market maker.
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| | distribution (e.g. in a game of chance,
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| Methodology
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| | they have flipped heads twenty years in a
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| Stock traders/investors usually need a
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| | row).
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| stock broker, such as a bank or a
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| | For this reason most academics and
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| brokerage firm, as an intermediate. Since
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| | economists recommend that investors
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| the spread of the Internet banking, it is
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| | invest in funds that follow an index in
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| usual to use an Internet connection to
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| | the market, i.e. long-term and
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| manage their own financial portfolios,
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| | well-diversified investments.
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| including ordering the sell/buying
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| | Dart Board Method
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| orders, set stop losses prices and define
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| | Financial journals and newspapers such as
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| buying/selling prices. Using the
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| | the Wall Street Journal have done
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| Internet, specialized software and a
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| | articles on stock picking in the past.
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| personal computer, stock traders
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| | One famous article involved a stock
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| investors make use of technical analysis
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| | picking contest between a panel of Wall
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| and fundamental analysis to help them in
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| | Street experts, the public and a dart
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| the decision process. They utilize also
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| | board. One member was elected to throw
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| several advising and information
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| | darts at the Journal's stock page in
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| resources based on the Internet and the
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| | order to select a portfolio. At the end
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| media, such as financial/business news
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| | of the experiment, the public and the
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| and data firms (Reuters, Bloomberg,
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| | dart board both beat the board of Wall
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| Financial Times, Yahoo! Finance, MSN
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| | Street experts. Was the dart board more
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| Money, AFX News, Newratings, Forbes,
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| | savvy? The dart board's triumph over the
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| BusinessWeek, Hoover's). They exclusively
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| | Wall Street experts can be attributed to
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| trade on their own behalf, as a
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| | chance (one could also attribute the dart
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| principal, investing money on a share or
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| | board losing to the experts to chance as
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| other financial instrument, which they
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| | well).
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