This section details many of the different types of traders and styles of trading that comprise the multifaceted world of financial trading.
Understanding the various types of trading styles, as well as the different markets available, can assist you in best deciding what strategies best suit your goals.
Types of Traders
A comprehensive article covering many different types of stock traders and trading styles.
These traders look for acceleration in a stock's price and then often take a long or short position in the stock with the hope that its momentum will continue in either an upwards or downwards direction.
A range-bound trader uses a purely technical method of predicting a stock's short-term highs and lows.
The KISS principle states that simplicity should be a key goal in design, and that unnecessary complexity should be avoided.
Types of Trading
Swing trading is a type of trading used in the financial markets which attempts to realize a gain from price movement within a fairly short period of time.
Technical analysis is widely used to augment many different trading philosophies, but in a broad sense, can also be thought of as a trading style in its own right.
This is a trading technique based on reading the market and making trading decisions based on the actual price movement on the chart, rather than relying on lagging indicators
High-frequency trading or HFT is a form of trading that uses powerful computer systems to execute multiple high volume trades based on market conditions in a matter of seconds or less.
Stock market day trading involves buying and selling assets within a single trading day. Profits are taken quickly from small price movements and traders often execute many trades in one day.
Day trading benefits include increased leverage, the potential for high returns, and reduced risk from sudden market moves outside trading hours.
Pattern day trading is a term which describes the activity of a trader who executes at least four day trades on the same security within a five-business-day period, using a margin account.
A contrarian trading style goes against prevailing market trends by buying assets that are performing poorly and then selling when they perform well.
Astrology trading is based on the principle that the financial markets are affected by planetary movements and lunar cycles.
Front-running trading is simply trading that is conducted with the intent of being ahead of other market participants.
Dark pool trading takes place in an environment similar to an exchange which allows for the private trading of securities.
Trading Different Markets
Social media stocks have become a player on the stock market since 2011, but there is varying opinion on whether social media stocks offer a viable trading platform.
Trading futures involves a financial trading agreement which obligates the buyer to buy a certain amount of an asset, and the seller to deliver it, at a predetermined price at a specific future date.
In respect to commodities trading, there are four basic categories which can be traded within; Energy, Metal, Agricultural, and Livestock and Meat.
Forex trading involves the buying and selling of currencies on the foreign exchange market. Profits are made by identifying a time when exchange rates are in favor of a certain trade.
Long-Term Equity Anticipation Securities, known as LEAPS, are structured in the same way as standard options contracts, but with a lifespan of between one and three years.
An Exchange-Traded Fund (ETF) is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.