When it comes to stock markets we all hear the words like stock trading or investing in stocks. These words may sound same to those who are not aware of the stock markets terms. Even though stock traders and stock investors operate in the same market, their role and tasks can be very much different than each other.
Stock Traders: They are people or entities that are involved in the trading of stocks or equity securities or buy and sell or exchange of some other financial entities. Stock traders can work for themselves as well as they work for someone else. They may also operate as investors, agents or speculators.
Stock Traders gain their profits by trading in short-term ranging from a less than hours to weeks, taking benefit of the price fluctuations. Most of the stock traders are full-time professionals but they can also work for part-time.
Stock traders are usually interested in markets where the commodity trading happens. So when traders are buying commodities like what they are actually looking to gain profits from the small price fluctuations occurring because of supply and demand. This is the reason the traders usually focus on:
1) Price pattern: Stock traders study the price history of the commodities to estimate the future prices. This might be risky and difficult to calculate as there could be huge historical data available. The trading software like the Crypto VIP Club can process the historical data efficiently. Check out this review to know more.
2) Supply and Demand: Traders gain the profits by observing the changes in prices with changes in supply and demand.
3) Market Emotion: Traders make use of techniques like fading where they bet their trades against the other traders after a major move in the market.
4) Trade Support: Traders also get the help from the market makers (another type of traders) to make liquidity faster.
Stock Investors: Investors are the market members that make use of fundamental analysis to make their decisions. Investors usually trade in medium to long-term and practice buy and hold methods instead of earning profits from small term price fluctuations. Investors usually treat the stock shares as a percentage in the actual company instead of just looking at the prices. Because of this, the investors look for below points before investing.
1) Value: Investors look for a company’s share that will produce good value.
2) Success: Investors look for companies that show the possibility of success in the future based on the financial strength and cash flow of the company.
Investors and traders even though work differently, play important roles in the financial market. They also in some ways depend on each other while trading, forming two broad groups in the market.