Investing in stocks somebody? We keep hearing this phrase over and over again. Move over fix deposits, the new trend is stock trading.
The principal capacities of individuals or companies dealing with equities i.e. stock are known as stock traders. These traders usually try to gain short term profits from short-term prices. These prices may last anywhere from a few seconds to several weeks. One can be a full time or a part stock trading professional. A stock trader becomes or acts like a financial advisor or manager, once he starts to act as an advisor or a money manager with the intention of adding values to the respective client’s finances. This financial manager may be an individual with his/ her own set up of business or affiliated to large banking or financial corporation.
There are many types of stock trading, such as day trading, swing trading, market making, scalping or trading, momentum trading, and trading the news and arbitrage. The trading floor at the New York Stock Exchange is the place where all the stock traders meet.
Stock traders and stock investors are different from each other. A stock investor purchases stocks and holds it for an extended period of time. This time period can stretch over several months and even years. An investor’s purchasing of stock heavily depends upon their primary fundamental analysis of their investment decisions. Buying and holding stocks for extended periods of time is a strategy which became extremely popular in the 1980s and 1990s. But in 2001-2003, the strategy lost some of its followers as NASDAQ saw its value decline by 60%.
Stock traders or investors can buy stock from the stock brokers, banks or from brokerage firms. Now that everyone has access to the internet, it is used commonly. In this fast paced world, everything has now shifted over to the computer. In NYSE, however, only a small portion of the trading volume is managed electronically. NASDAQ however is completely electronic.
This has made analysis easier for firms. A formal degree in economics, mathematics or computer science may prove to be of help for the occupation of a stock trader.
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