what type os traders are there? and stock market questions?

Question

i have herd of a day trader and am not sure what that is. could you explane what it is as wll as any other type of trader?

also would you tell me some good books on the stock market? i need to know how to read charts and other things that are usefull to make money investing.

from what i know it sounds like stock and stock options are the best is this true?

Answer 1

The differnet type of traders in stock market are bulls who buys the stocks, bears who short sell and arbitragers who take advantage of short term mispricing of the stocks.
If you want to read about stock market there is a book by Steven Achilles on Technical Analysis. This will teach you many things about technical trading.
The only way to learn a lot about stock market philosophy is to go and get a MBA in Finance core or a CFA. You can also join some courses the stock exchanges offer to teach stock trading in which case you might even get a certificate to do trade in stock exchanges provided you would like to be a broker in any exchanges for a fee ofcourse.
There is nothing called the best. Lot of investors choose the stock route since that is widely published and information is easily available on it. Commodities, precious metals, oil, livestock etc; are also good investments provided you know thoroughly the markets and know when the market moves in which ever direction. Information on these are hard to comeby though internet can be a good source for patient investors in anything.

Answer 2

No. For income tax profit or loss purposes the commissions you paid are not considered seperate from the money you lost. If you google some stats on "day trading", you will find you are not alone! The only people that make any money from day-trading are the very tiny percentage of lucky ones and the brokerages that collect the commissions! (Plus people that sell 'systems'!)

Answer 3

Hi,

I think it is best books to learn trading. Actually it is like A-B-C for every trader.
Market Wizards by Jack D. Schwager;
Technical Analysis by Jack D. Schwager;
Comprehensive Course on The Wave Principle by A.J. Frost and Robert Prechter;
Candlestick Charting Explained- Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris;
Trading Chaos – Applying Expert Techniques to Maximize Your Profit by Bill M. Williams;
New Trading Dimensions by Bill M. Williams
Trading Chaos II by Bill Williams – Maximize Profits with Proven Technical Techniques by Justin Gregory-Williams and Bill M. Williams

Those books teach you read indicators, charts and create your own trading system.

Trading styles are:

Scalping

Scalping involves making dozens or hundreds of trades a day, trying to scalp a small profit from each trade by exploiting the bid-ask spread. Scalping works because not all stocks remain on the move at all times. Scalpers generate profits from these non-moving stocks or turn around and sell for a profit those stocks that fluctuate in the positive direction. This way, they receive a small profit. This profit quickly adds up.
Some advantages to scalping include less exposure to risk (because it doesn't have the time in one position to be effected), easier-to-obtain moves and more opportunities to realize a small profit. Of course, there are no perfect strategies. Many Forex trading platforms prohibit scalping and will charge a fee for making more than ten trades in a one day. Therefore, it would benefit the trader to find out if this practice is allowed on their particular platform.
It is important to have an exit strategy set up before trying to scalp, as it would only take one large loss to eliminate an entire day's positive profits. Utilizing a one-minute chart will give the trader a better idea of what trades to make and which to shy away from.

Day trading

Day trading with the foreign exchange market is in some ways vastly different to that in other markets, in addition to which, day trading in the currencies market does not suffer from the unpleasant connotation that may spring to mind when one thinks of such things with relation to the stock market.
That said, if you have previously traded in other markets, then many items styles utilized in forex, such as forwards, futures, options, spread betting, contracts for difference and also the spot market are very similar to those used in the equity markets, and often maintain a minimum trade sizes for the base currencies.
It is worth noting however that day trading, being a fast moving, highly challenging trading style may not be for everyone. Should decide that day trading is for you, then there are also many different styles and variations of day trading with the currency market that you may wish to sample before choosing the form that feels right for you, or maybe you will prefer to utilize a series of styles.
The best way to learn the day trading styles with regards to forex markets is the same as in learning and perfecting any other trading style, or indeed other skill; by practice.
Talking to you forex trading mentor and other experienced day traders to see what styles have worked best for them over the years, ask for any hints, tips and techniques that may be of benefit and try them out before making the definitive choice of which style will be right for you.

Swing trading

Traders, who can react quickly to market changes, including at-home and day traders, benefit from swing trading, which is a trade strategy that involves holding a position for longer than a day. If a trade seems to be going sour, swing traders can exit the market before losing too much money. Swing traders usually maintain a position for 3-10 days, taking advantage of any positive swings in the market. They flow with the market, taking little trades here and there. Most swing traders have an interest in the trends of stocks rather than fundamental values, although it has often been said that swing trading is a variety of fundamental trading. In fact, swing trading sits squarely in the middle between day trading and trend trading in terms of the length of time invested in a position. These traders stick around just long enough to see how the wind will blow before deciding to stay and see a trend through or go on to more profitable pastures.

Position trading

A position trader can be compared to a squatter who sets up a tent in the middle of a crowded shopping mall, letting people pass by and stare but remaining relatively untouched by them until the authorities come in to shoo him off.
Since position trading involves staying in one position for more than a day, unfavorable market conditions rarely phase traders who use this trading strategy, unless they continue for more than a couple of days. Of course there are risks involved with staying in one position for so long, but the risks are less than those experienced by day-traders, who have to enter and leave the market many times in a day, leaving too much opportunity for mistakes. One disadvantage to position trading is that any changes that occur overnight or after hours can result in a serious financial loss. However, because of the constant fluctuation in currency values, the same magnitude of value change can occur in the other direction as well, allowing the trader to realize a higher profit during hours when most day-traders are asleep.

Mechanical trading

Mechanical trading system is often touted as the end-all to Forex trading. Traders choose a system to follow and enter it into a program that will then pick starting and stopping points for trades as well as maintain a position, without requiring a trader be present to control those actions.
Implementing a mechanical trading system can be the best decision a Forex trader can make. However, it can also be hard for those traders who work off of emotion. The idea of putting future profits into the hands of a computer program can be a scary situation, however, with free platforms available now, it is a limited-loss system: a computer program won't ride a trend just to see it plummet in the end, and a program can't get cold feet and sell too early.
As an automated system, a mechanical trading system is a good all-around program to keep in the background. Whether a trader wants to implement a break-out system, reversal, indicator or trend-following system, there are plenty of options available.

Discretionary trading

Discretionary traders are the psychics of the Forex market. These traders rely on their intuition to decide when to enter or exit a market. While other trading methods emphasize the reading of signals based on formulae or patterns, discretionary trading involves using subjective experiences. They are the polar opposite of the mechanical trader.
Because discretionary trading is based on intuitive reaction, it is best suited to those traders who feel comfortable relying on their gut-feelings to tell them when to buy or sell. Many traders can make large profits by jumping on profitable position changes quickly. But there are also disadvantages to using this kind of trading system. Discretionary traders may end up making a great profit with their trades, but without using a formal system, there is no way to backtrack to find out how they succeeded, so there's no way to repeat the process.
Even without having a fool-proof system, discretionary trading can be very profitable, while at the same time offering traders the flexibility and control to jump in and stop a trade that appears to be going downhill or modifying a bid to maximize profit if it appears that a trade value is increasing.

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