Stock Trader

February 15, 2009

Are You an Investor Or Trader?

stock traders

What do you do in the stock exchange – do you use stock investment for a long-term income or you use it to earn short-term profits?

THE INVESTOR

This is the person who buys the shares of a company and keeps them with him. Initially, they have to deliberately invest into the stock of a company once; they don’t need to think about it again if they have gone with the right company.

TIPS FOR THE INVESTOR

Do good market research to know about the past and present economic status of the company to assess it in terms of consistency. Also be analytical about how it is expected to perform in the future.
Go for renowned companies if you are an investor.
If hiring a broker, hire the best stock broker you can go for. This is because you are investing for long term and a good advice from the good stock broker would cost you once but will be beneficial for you in the long-term.

THE TRADER

The stock trader is the one who invests in stocks that have a probability to increase, in demand and in price. He invests just to sell them later at an increased price and gain some profit. This is a different type of earning profit from the stock exchange. You do not incur profit from the company. You make profits due to changing demands and prices of stocks.

TIPS TO THE TRADER

Unlike investor, the stock broker by a trader cannot always be the best one, for the best ones charge the highest commissions.
As a trader, you have to be aware of a wide number of facts and figures, which may directly or indirectly affect the prices in the stock exchange.
A good choice for a trader would be to go for online trading. The online brokers are very cheap in terms of the commission rate charged.
Always make educated and well thought decisions. Haste and carelessness are the enemies of stock trading.

How to Convert Losses Into Profits in Stock Trading?

In the business of stock trading, sometimes losing money became inevitable. There is no doubt that if you have a long term plan in investing stocks, you will come out as a winner even though the stock prices fluctuates in long span of investment.

The historical data proves conclusively that despite market fluctuating bear runs, corrections and recessions, the stock prices tend to move upwards over the long time. As a smart investor you should utilize your investment both for the short term and long term investing. While certain kinds of long term investments like scheduled investments, dividend reinvestment multiply phenomenally over the long terms, one should not miss out the current day-to-day opportunities that stock trading offers.

It is recommended that while you may safely make 70% investment in long term plans, you may keep the remaining 30% for investing on short term trends.

It must, however, be noted that you should invest cautiously in trend changes. Moreover if the trend changes, you too should be ready to change with it.

Study the monthly market chart in respect of the stock you are interested to invest in. You should not wait for the price of your stock to make a turn around because its price may, instead, continue to fall further down.

How do you confirm that the market is trending downwards?

You must understand that the market might have taken around an year to reach the top and thereafter it started falling down, Quite possibly it might take an year to form a base.

You should study the market trends not only on monthly basis; you should study them on weekly and daily basis too.

You have seen that the monthly trend is down which is further confirmed by the fact that weekly and daily charts also show the most recent leg down.

How do you make good your loss even when the price of your stock continues to fall?

You should take to short selling your stock. Sell the shares immediately at the prevailing market price. Now buy the same number of shares of the stock from the market at their reduced price and return them to your stock broker. You must understand that you may suffer more losses if you continue to wait indefinitely for the price of your stock to take a turn around.

Also learn about dividens stock and how to invest in stock market