|
|
|
|
|
|
|
gains, usually 1/8 to 1/2 of a point, on 1000-share lots. They trade in a day trading firm or on their own, and often have hardware and software that gives them direct access to exchanges and electronic networks, which is much faster than trading through a browser and online broker. They hold stocks for less than five minutes and sometimes less than 30 seconds. At the end of the day, all positions are closed. |
|
|
|
|
|
|
|
|
2. Swing day traders. These can be active traders but will hold stocks for longer periods than the five minutes a day trader would. They may hold a stock for three hours or longer. This type of trader is looking for more than just fractional gains. They are trying to capture intraday price swings caused by news events, stock splits, or other events that move the stock within the trading period. They will also settle all accounts by the end of the day. They may use a trading firm or browser-based online broker. |
|
|
|
|
|
|
|
|
3. Position traders. Also known as swing traders (not swing day traders), this type tries to capitalize on a stock move over a period of a few days or longer. They may sometimes exit positions the same day they enter them. They will hold positions overnight, aiming to maximize profits from a swing in stock prices over a few days or longer. |
|
|
|
|
|
|
|
|
4. Online investors. They make their own investment decisions without the assistance of a broker and save on commission cost. They typically buy stocks for investment purposes, intending to hold them for months or years. They have accounts with a browser-based online broker. They may also trade on a shorter-term basis, but not as often. The powerful bull market and the volatility in stock prices have turned some who initially traded only sparingly into more dedicated frequent traders. A growing segment of these investors are increasingly willing to take higher risks, trading over shorter periods, in hopes of significant gains. |
|
|
|
|
|
|
|
|
The first three types use short-term trading strategies and are considered short-term traders. The main difference among them is how much risk they are willing to take in their money management. That is, ending each day flat, having closed out all positions, versus what is considered more risky, holding positions overnight. The thinking is that there are too many outside variables that may affect a stock overnight, so it is viewed as more risky to hold onto it. |
|
|
|
|
|