Stock trading can take place on a public exchange such as the New York Stock Exchange (NYSE) or NASDAQ or on private marketplaces by quililfied investors and sellers.  These days most people are able to buy and sell stock online using their own computer and inernet connection.   There are three types of people who buy and sell stock.  They are known as:

  1. Long term investors.  These individuals will buy and hold a stock for over 1 year.  They do lots of research on the company and its competative position in the market before they decide to invest.  This is the least risky way to trade stocks.
  2. Medium term traders.  These individuals will buy or sell stock with the hope of making a profit within several days to several months.  This method of trading is more risky than long term “buy and hold” methods.
  3. Short term “day traders”.  This is the most risky way to trade stocks.  Day traders will open and close their stock positions within the same trading day.  Day traders rely on technical indicators such as the moving average of a stock’s price to make their trading decisions.  They often don’t know (or care) what the company that they are buying stock in does.  The rewards can be very great for this type of trading but so are the risks.

What type of stock trader are you?

Suggested Next Reading:  Advantages and Disadvantages to Stock Trading Online

 
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