Are you a Trader / Investor or In between the Lines?

After going through several forums, I have seen a lot of new investee/tradees* getting caught in blurring what they want to do with the equities they have bought. Many investee / tradees start plunging into the equities and getting their feet wet. However, most people will be caught with their pants down and it resulted in holding their equities as long term instead of what they had hoped for a quick buck.

These investee/tradees are those that bought on the highs and usually sell at the lows. They usually followed the herd and lose out when the tide recedes. In the stock market, there are many type of people with regards to the equities they have bought. Generally, i would like to classify into these few groups. Namely:

• Scalpers
• Day trader
• Swing trader
• Investor

Scalpers : - Works on profiting from 1 bid to 2 bid differences. Their risk is super high as they sought to profit with big quantity in buying up the shares. Their holding period could range from secs to mins

Skills required: technical analysis, market volatility, lots of backup money, trading plans

Day traders: - Their aim is to profit from the swings that is created during the trading period. It could be long/short and the market must be volatile for them to employ this type of strategy. Usually, they choose stocks that has high betas and they will usually closed their position before end of day. Their risk is high but lower than those who are scalping.

Skills required: technical analysis, market volatility, enough money to pay any losses, trading plans, time

Swing traders: - My style of trading which i believes more suitable for those who are busy with jobs & duties. Swing trades takes time usually range from 1 week to 3 months exposure. Their risk are much lower as they have holding power.

Skills required: technical analysis, fundamental analysis, patience, trading plans

Investors:- Last but not least the long term investors. As some people in the forums complaint that they have become long term investors due to stocks price that has fallen way beyond their buy-in price. A true blue investor looks at equities as a piece of business that they would want to hold for the long term. Usually, these are the savvy businessman, that would take opportunities to load up more if the offered price is at bargain and sell only when the market overpriced its stocks or the business outlooks becomes poorer due to competition or other issues.

Skills required: technical analysis (minor). fundamental analysis, patience, ability to interpret financial reports, business savvy.

Hopefully with this article, Investees / tradees would be able to take the plunge in the equities without being killed in action and to take that baby steps towards financial freedom.

* - My own definition of new investors / traders

DISCLAIMER The ideas expressed in this blog should not be used to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.