Reviewed by Sep 30, 2020| Updated on
A stock trader is an individual or business entity that is involved in equity investments in the financial markets. In order to become a stock trader, the individual must have a great knowledge of the markets in addition to the capital for investment. Also, trading requires a lot of research and hence requires an immense amount of time to keep track of the financial markets.
Often referred to as retail traders, individual traders can buy and sell stocks with the help of an intermediary, such as a brokerage house or an agent. Institutional traders, however, have a greater influence on the market as they are generally hired by hedge funds, pension funds, portfolio managers, and investment companies.
Stock traders, as the name suggests, are individuals who trade shares and equities. The primary objective of a stock trader is to trade, i.e., purchase and sell shares of different companies at the right time and the right price and make a profit out of the transactions for both the clients as well as themselves.
Traders are pivotal when it comes to maintaining liquidity in the financial markets. Stock traders are required to stay up to date on various key factors that can influence the price of stocks in the markets.
Stock traders can be categorised into three types - informed, uninformed, and intuitive traders.
While informed traders make use of fundamentals, patterns, and technical analysis to make transactions, uninformed traders take an approach that is entirely the opposite. Intuitive traders, on the other hand, find opportunities by primarily relying on their experience and instincts.
Stock traders can be further classified depending on their style of trading, such as day trading, swing trading, long-term trading, and momentum trading.