A stock trader, short stock trader, or equity trader is a private individual or company engaged in trading stock, options, commodities, currencies, derivatives, and other financial investments in the stock market. Stock traders can be either an institutional investor, private agent, broker, futures trader, or speculator. The word “trader” comes from the words trade and brokerage. In the US, a registered broker is required to be a member of the National Association of Securities Dealers (NASD) and to be a member of the Corporation Dealers Association of America (DAA).
For the novice investor, online share trading can be intimidating and confusing. Share traders should not invest large sums of money in shares without first learning the basics of stock exchange. Many people are intimidated by the sheer number of potential shares and the fact that shares can rapidly change in value. To help navigate the world of share trading, potential investors should read the frequently asked questions, glossaries, and articles on the NASD, NASDAQ, and the NYSE websites.
Investors can start by opening a standard savings account. As with any investment strategy, it is important to understand risks and reward before putting money in the stock markets. Shares on the stock exchanges are listed in pairs. Investors can buy shares of one or more stocks and sell the same stocks simultaneously, following the same set of guidelines used by the issuing company. In the stock exchanges, shares are listed in pairs such as “A B”.
Because the stock exchanges are global in nature, trades can take place across state lines and sometimes even international borders. Investors need to become familiar with international markets, regulations, and strategies. In the United States, there are several federal exchanges where shares of companies are listed. Large financial institutions may also trade shares on the national exchanges. These large trade groups include the NASDAQ and the New York Stock Exchange. Private individuals, like individual traders, may also participate in the stock market by buying and selling shares on their own.
Share trading strategies vary according to the size and frequency of trades. Large traders who buy and sell shares on a regular basis have strategies that involve many different exchanges. In order to successfully trade on multiple stock exchanges, traders must learn how to predict which exchanges will increase in value and which will decrease in value over time. Successful traders will also learn how to identify sectors that are likely to increase in earnings and create profit opportunities. They will analyze sectors based on their capital structure, debt structure, earnings momentum, quality of products or services offered, outlook for sales growth and customer supply.
Although the market sentiment can be an important factor in determining the success of any trading strategy, an investor’s ability to identify and analyze market indicators can have the greatest impact. Short term stock prices will generally tend to follow a trend that is reflected in the overall stock prices. Long term stock prices will tend to follow a longer and more gradual trend. By being able to recognize the trend of the market and being able to interpret its signals, a knowledgeable investor can become a successful short term and long term stock trader.