What are traders?

[vodoo]

Im actually reading "Trading in the zone".
But then i was asking myself the question:
What are traders?
In which stocks do they invest?

Are traders people who buy and sell stocks every day?
Or do they keep their stocks longer?
What do u think?
Thx

[spino1i]

And the answer is:

d) all of the above

[Sniper]

A trader is generally someone who is looking to take advantage of short term price changes (or lack thereof).

The specific type of trader in the broad trader category can be defined by the specific time frame (scalp, day, swing, etc) they are looking at, and other factors, including what specifically is being traded (stock, option, futures, commodity, etc)

[Mr. Now]

Traders trade.

Not all traders make money long term. Most traders become "investors" when a position moves against the trade in a substantial way.

It can be hard to understand the writing of Douglas unless you have substantial experience.

[Sniper]

[ QUOTE ]
Most traders become "investors" when a position moves against the trade in a substantial way.


[/ QUOTE ]

Mr Now, would you a agree that a "Trader" who falls into that category probably shouldn't be trading in the first place?... or at least has a "leak" they need to work on.

[Mr. Now]

Sniper,

Absolutely. We must to fold when we miss. This is essential.

See:
Disposition Effect- caused by a need to be right. This need can be very expensive.
http://disposition-effect.behaviouralfinance.net/


Loss Aversion-- aka "denial of reality."
http://en.wikipedia.org/wiki/Loss_aversion

[pig4bill]

[ QUOTE ]
Traders trade.

[/ QUOTE ]

'Zackly. They don't invest. Investors want to own a piece of the company. Traders couldn't care less about owning the company.

[ QUOTE ]
Not all traders make money long term. Most traders become "investors" when a position moves against the trade in a substantial way.

[/ QUOTE ]

LOL, a.k.a "bagholders".

[ QUOTE ]
It can be hard to understand the writing of Douglas unless you have substantial experience.

[/ QUOTE ]

Mark Douglas? It doesn't help that he's not much of a writer either. His stuff comes off like a textbook, and more than a little arrogant.

[Mr. Now]

Mark Douglas built a large lifestyle of material consumption from trading profits, then he went bankrupt. Literally. He lost everything.

Then he came all the way back (in trading) after starting over with all-new beliefs about the market and risk.

Then he wrote his books.

Have you actually examined both of his books in detail, from front to back? Have you met the man?

Mark Douglas used to be very arrogant, and that is part of exactly how he went bankrupt. He describes all of this in detail, in his excellent books on trader psychology.

It can be difficult to fully understand the importance of his writing without extensive experience.

[Sniper]

Mark Douglas website

[AaronBrown]

At one extreme, a trader is someone who executes orders for someone else (an "order taker"). He knows the different ways to get a trade done and works within his discretion to get the best price. This is the least prestigious and glamorous kind of trading, but it can be a nice steady job. It takes skill.

At the other extreme is the pure speculative trader, which is what the other posters are talking about. She can work for a big firm, or a hedge fund or with her own money.

Many traders are in between. They sit at a desk in a big firm executing routine orders for a spread, but can place some prop positions, or take a lot of discretion with orders. If they make a lot of money, they get bigger limits and do more prop. If they lose money, they quit trading or become order takers.

While it's true that traders usually take shorter-term positions than investors, that's not the defining difference. Some convergence strategies hold positions for months, about as long as some active portfolio investors.

The key is a trader expects to diversify away most of his risk through doing lots of trades. He may do 1,000 trades a day and win 50.1%, or 10 trades a year and win 80%, but it's number of trades that counts. An investor expects to diversify away risk through holding lots of securities over long periods of time. A related difference is traders are concerned with absolute return, winning or losing money. Investors are often content to take what the market gives them, maybe trying to do a bit better, but basically willing to lose money when the market goes down.

In poker people distinguish between playing your cards and playing your hand. If you play your cards, you play good hands and hope they win. If you play your hand, you bet aggressively and hope to win more when people fold to you or call your good hands than you lose when they call your bad hands. Playing your cards is like investing, playing your hand is like trading.