What are stock traders?

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