The 4 Types of Trader

You may have plenty of experience in the market of trades, you may have covered all there is to know within Trading 101, but it is not likely that you are familiar with every single thing there is to know about the market. The market is ever-growing and continuously expanding, there is always something left to know for even the most experienced of traders. One particular fact that traders may not be aware of is that there are four typical kinds of trader used to distinguish traders from one another. Which one are you?

1. Fundamental trader

The fundamental trader uses the most traditional methods in order to choose the best investments. This means that the history of a company is thoroughly researched, along with criteria that may dictate how much potential lies within the company’s future.

This type of trader is most closely reminiscent of the type of shopper that goes from store to store investigating and researching the ins and outs of the business before finally choosing a place to spend their money. Of course, this type of trading involves extensive research, which takes a considerable amount of time. Despite the process of trading for the fundamental trader being lengthier than most, once they’ve done their research and settle on an investment it is usually for good.

2. News trader

News traders are mostly known for their tendencies to pursue short-term trading. The reason why news traders tend to prefer short-term trading is because this type of trader relies on more short-term criteria in order to decide on their trades. This means the news trader takes much less time to choose their investments than fundamental traders. This also means, however, that the criteria being followed is not specific to any company, and is therefore not particularly reliable when it comes to longer periods of time.

The primary criteria used by news traders is, you guessed it, news. These traders jump at every sight of positive or negative news that may influence the market. This may be a downfall of news traders due to the fact that their way of making decisions tends to be too rash and precipitated.

This is considered a downfall because the market may rapidly change directions upon making these decisions in a way that no news trader would be able to predict. For this reason, most news traders are advised to stay calm and not jump on every news opportunity that comes their way. Rather, news traders need to learn to take news that may influence the market with a grain of salt. When in doubt, let it soak in rather than hopping in and out of the market.

3. Trend Trader

Trend traders are the masters of letting aspects of the market soak into their thoughts before taking a plunge. They may not take all of the time fundamental traders take in researching the history of companies and what makes them tick, but they do tend to take a substantially longer time than news traders.

Trend traders focus on studying the patterns and trends found within the market. They use these trends in order to predict what outcomes the market is likely to provide them with upon investing.

4. Time trader

These traders try to accomplish the seemingly simple task of predicting whether the market will move upward or downward, whether it will drop or succeed. In order to receive high returns from investments, these traders have to find the right time to jump into the market in order to follow their risky movement predictions and play their luck.