Smita Parekh 13th Apr, 2019
The stock market provides an opportunity to make money. Someone who is new to the market isn’t quite sure about the process of buy and sell, the major reason that attracts people to this market is that there is an unlimited scope to the amount of money that one can make in a particular trade. This creates curiosity and interest within a person. But before one starts trading the market they need to identify that which type of a trader are they, which type of trading technique suits their personality the best. Let’s look at some of the most common types of trading techniques which will provide an insight into the trading terminology and strategies used by different investors and traders who are attempting to build wealth in the markets.
Below is the list of the most common trading strategies-
• Fundamental Trader- Fundamental trading is a method by which a trader focuses on company-specific events to determine which stock to buy and when to buy it.
• Arbitrage Trader- Arbitrage traders simultaneously purchase and sell assets in an effort to profit from price differences of identical or similar financial instruments, on different markets or in different forms.
• Sentiment Trader- Sentiment traders look into identifying and participating into market trends. They do not challenge the market by finding great securities. Instead, they make an effort to identify securities that are moving with the force of the market.
• Noise Trader- Noise trading refers to a style of trading in which decisions to buy and sell are made without the use of fundamental data specific to the company that issued the securities that are being bought or sold. Noise traders generally make short-term trades in an effort to profit from several economic trends.
• Market Timer- Market timers try to speculate in which direction (up or down) a security will move in order to profit from that movement. They generally look to technical indicators or economic data in order to predict the direction of the movement.
People take part in trading to try and attain their financial goals. Some buy, hold and wait for time to pass and asset prices to rise. Either way, if you know your personal trading style and strategy, you will have your peace of mind and willpower to remain comfortable with your chosen path when market volatility or sizzling trends make headlines and cause traders to question their trade setups.