6th episode : STOCK MKT

Many of the beginners get confused wid d term Stock Trader, Stock Invester, Day Trader, Intraday Trader etc. here is a brief description for all these terms. Chose a term for u after digesting all the general info & deep knowledge about it.

A Stock Trader

A stock trader is a market participant, either an individual or firm, who purchases shares in a company with a focus on the market itself rather than the company's fundamentals. A stock trader usually tries to profit from short-term price volatility with trades lasting anywhere from several seconds to several weeks. The stock trader is usually a professional. Persons can call themselves full or part-time stock traders/investors while maintaining other professions.

A Stock Investor

A stock investor is the market participant that the general public most often associates with the stock market. Stock investors can be firms or individuals who purchase stocks with the intention of holding them for an extended period of time, usually several months to years. They rely primarily on fundamental analysis for their investment decisions and fully recognize stock shares as part-ownership in the company. Many investors believe in the buy and hold strategy, which as the name suggests, implies that investors will buy stock ownership in a corporation and hold onto those stocks for the very long term, generally measured in years.

Day Traders

Day Traders are investors who generally buy and sell the same stock in the same day. This type of trading is not limited to just buying stocks, they may also buy and sell stock options, currencies, or a whole range of futures. Typically day traders may hold a stock for a matter of seconds or minutes, additionally they may buy and sell the same stock several times during the course of a day. They tend to be out of the market (sell all of their stocks) before the trading day ends to avoid any possible after market gap downs (a situation where a stock may open the next day at a lower point than it closed the previous day). They avoid the risks of long term buy and hold.

Day trading requires a significant amount of time on a daily basis. Generally people who day trade are doing this for a living, spending their entire day at the computer buying and selling stocks. This type of strategy for stock market trading is only effective for day traders, who apply analysis rather than emotion to trading decisions.

Intra-day Traders

The name 'intra-day trader' refers to a stock trader who opens and closes a position in a security in the same trading day. This can be buying and selling to capitalize on a potential rise in a security's value or shorting and covering the short to capitalize on a potential drop in value. Intraday traders capitalize on small moves in the value of a security by using "leverage" or "margin", which basically means borrowing money.

Day traders and intra-day traders are at the top of the risk spectrum. They participate in rapidly changing market conditions, looking for quickly developing profit opportunities. Mostly these traders employ technical analysis to determine when conditions are right to enter either long or short, and then to exit (hopefully with a profit).

With the elevated risk comes the potential for extraordinary ROI (Return on Investment).