There are different categories of stock trader & investors.
The different kinds of investors can be grouped using different variables.
However, for today, it’s about the time frame you can risk before liquidating your position in any company.
This brings us to just three categories of investors – Trader, short-term investor and long-term investor, says Techpally.
For any investor to succeed in any of these categories, you’ll definitely need to have the knowledge of fundamental analysis (FA) and technical analysis (TA) both FA and TA can further be subdivided, especially TA.
The difference between Traders and Investors
Basically, traders make use of technical analysis in making both entries to stock and exit from it. Long term traders don’t care much about technical analysis as they believe it’s only depicting what’s happened to a company in the past and can’t reveal the good prospect of any company’s financial statement.
However, short term traders usually employ both technical analysis (TA) and fundamental analysis before making investment decisions. When looking for investment opportunities, chart technicians only look at the chart development of security, while fundamental data are left out.
Fundamentally oriented investors, on the other hand, focus on ratios such as price/earnings ratio, return on equity, cash flow, dividend yield, or degree of liquidity.
TA or FA – What Should You Rely On?
Every investor has to decide for himself whether he prefers technical analysis (TA) or fundamental analysis (FA). It is critical, however, that every investor knows the key facts about both approaches.
Why? This can be shown with two simple examples. Imagine trading on technical analysis and your strategy is to buy counter-cyclically when a stock’s RSI drops below 25. You also have good money management and your stop-loss is determined in advance.
However, if the company in question is close to bankruptcy, for example, a quick look at fundamentals could have reduced your risk.
In the opposite case, however, it could also be fatal to concentrate on key figures such as P / E and dividends, but ignore a technical downtrend, TechPally business executive advised.
Because often critical developments can first and foremost be read in the chart before they are reflected in either past or estimate-based key figures. With a share that has released significantly weaker financial print than her sector or overall market over a longer period, there is usually something fishy.
Test the waters before diving in:
Why should you test your trading or investing approach before committing huge funds into the market? You must’ve heard that you should not commit funds you can not afford to lose in the stock market.
While you can make ‘big money’ from trading stocks, you can as well lose ‘big money’ if the price moves southward. During the last Techpally financial breakthrough series in Las Vegas, we explained the importance of a trading strategy that matches your personality.
Simply trying out different strategies can make you lose a huge amount of your investing capital and is of course not what you’ll be glad about. Many brokers allow you to set up a demo account in addition to your live trading account.
Here, you can trade with virtual money, but on real terms and with real market data. It is highly recommended to open a personal training deposit/sample deposit and use it permanently. Trade with your demo account exactly as you would in your live account.
Handle the virtual fund in your demo account like you’d do in a real account and take a serious and disciplined approach to trade. Once you’ve found and tested a strategy that suits you, your demo account should show a decent profit. With this in mind, you can then move on to executing this strategy in your live account with real money.
Take a lot of time for this. You don’t learn a new strategy in a week; this process can take many months, Techpally boss advised.
You can Bank on other people’s Success:
Use the information available for yourself. There are millions of investors worldwide, many of whom – successful or not – are only too happy to share their knowledge with others. Thousands of books have been published on investing, trading, and investing, and there are trading seminars and websites.
Use this to your advantage! But which websites offer good and useful information? To get information and news on the New York stock market, you should of course check Techpally business. Then you can quickly access well-known portals such as Wall Street Journal, FT, Bloomberg, etc.
Many sites offer real-time news and updates as well as data, statistics, and professional analysis.