The stock trader in you can vary depending on the trade

DISCLOSURE: This webpage may contain affiliate links. An affiliate link is a link which goes to a 3rd party website. After reviewing the information on the 3rd party website and if you choose to make a purchase, I would receive a small commission at no cost to you. You can read more on my Disclaimer page.

Use different accounts for different styles of trading

The type of stock trader you are will determine the time frame you trade, when you will buy and sell as well as influencing which stocks you will buy. Once you become familiar with trading, most people can carry positions as either a day, swing or position trader. Some may also find situations in which it pays to be an investor.

Let us divide the trading world into four different types of traders and give them the following definitions:

Scalper

1. Holds stocks for seconds to minutes
2. Buys 1000's of shares but only makes a couple of cents per trade
3. Is looking for the difference between the bid and asked to make a profit
4. Could trade more than 100 times a day
5. Needs extremely good data
6. Likely prefers to be on the floor of the exchange

Day trader

1. Holds stocks for minutes to hours
2. Uses interday and daily charts to make buying decisions
3. Needs real time data
4. Is looking for large interday moves
5. Could trade more than 10 times a day
6. Needs strict risk control strategies

Swing trader

1. Holds stocks for days to weeks
2. Could trade more than 10 times a week
3. Uses interday and daily charts to make buying decisions
4. Is looking for large moves over a short period of time
5. Needs risk control strategies
6. Can use real time or end of day data

Position trader

1. Holds stocks for weeks to months
2. Could trade more than 10 times a month
3. Uses daily or weekly charts to make buying decisions
4. Is looking for large moves over a long period
5. Needs risk control strategies
6. Generally, uses end of day data

The next level is an investor. Investors are not traders but some people who are traders may think they are investors.

Investor

1. Holds stocks for months to years
2. Uses daily or weekly charts to make buying decisions, although many may not use charts at all
3. Likely buys or sells less than 10 stocks a year
4. Is looking for large moves over a long time period
5. Spends a lot of time researching stocks prior to making any buying or selling decisions
6. Likely sells when the fundamentals change

One of the qualities required for all of the above types of traders is discipline. It does not matter what type of stock trader you are, all stock traders require discipline. Without will-power, your trading journey could be a rough one.

Terms of Use and Website Agreement