EVERYTHING YOU NEED TO KNOW ABOUT STOCK TRADER TYPES
The perks and benefits of being a stock trader is one of the most coveted but first you must be a successful a stock trader. A lot of people go into stock trading with the hopes of multiplying their wealth through a well-executed strategy to maximize the potential of their money. As experience has taught everyone in the market, there is no sure way of earning high returns in one particular way. There is no one clear path to becoming a successful stock trader. You must find your own style to suit your needs and wants.
Thankfully, experiences also taught everyone in the market that you can be any type of trader you want and be successful so long as you play your cards right. There all kinds of traders that proliferate the market but they may be divided into three categories.
Before delving into what kind of stock trader type you want to be, first scrutinize yourself. What kind of trader are you? You must be able to answer what kind of personality you have, the time you’re willing to invest and your availability, how much risk are you willing to take, and how much can you put as your capital investment. When you have decided what you want, it’s time to know what type of stock trader you are.
Stock traders typically focus on three areas: the growth, the value, and the income.
The growth-oriented stock trader typically purchases stocks of new and upcoming companies that are set to expand in business and profit. The reason for this is because these new companies have the potential to grow exponentially in a short period of time but at the same time, have high risks of the new business to fail as well such as IPOs (initial public offerings). Growth-oriented stock traders, other than using research, must utilize of their instincts. This kind of stock trader is prepared to take high risks for high returns.
Stock traders who are value-centered generally look for underpriced stocks. These stocks are owned by companies that have good potential to perform well contrary to their stock prices. A way to do this is to look at companies in the same field where one is dominating. The competitors of this dominant company may have underpriced stocks. This stock trader is less risky once proper research is done.
The most conservative category of stock traders is the income-focused trader. The reason for this is because this he or she aims for capital preservation. This means that the stock trader will go for the best known company with a good history and low price fluctuations. As this is the least risky, this also gives the least return. The important thing for the income-focused trader is a steady flow of return. He or she may also invest in time deposits and bonds.
The three categories of stock trading are not strict rules but are only guides. Stock traders are encouraged to be flexible to ride the trends in the market. All styles of stock trading have potential to be profitable as long as the right research is done and a bit of foresight is put into it. You can be any kind of stock trader that you want as long as you are comfortable with your style. Find inspiration in successful investors and make sure you enjoy what you’re doing.
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