Types of Futures Traders

September 20, 2014 by Katherine

When it comes to trading, an experienced trader would know that there a lot of facets in trading. For first time traders, therefore, there is much to learn. In learning, it is a step by step process. Thus, in learning about trading, the process should start at the basics. One of the basics in trading is knowing the many different types of trading. In this article, it shall tackle one of those types which is futures trading. Specifically, this article shall focus on the four types of futures trader, namely, hedgers, speculators, arbitrageurs, and spreaders.

There are many types of future trader.

First type of futures trader would be hedgers. What they basically do are hedging trades against price risk. They short futures contract while still getting to own the underlying assets. They sometimes also do this in order to secure their existing positions. This is because positions are sometimes at risk due to price fluctuation that happens all the time.

Price fluctuations risk positions of traders.

Second type of futures trader would be speculators. This type of traders offers liquidity and activity in the market of futures trading. They do this by their strategies in day trading and swing trading. These strategies include the buying and selling of futures contract directly so that they can also speculate on strong directional moves, thus the name speculators.

Third type of futures trader would be arbitrageurs. This type of trader is in the market for one thing only and that is to spot anomalies in the market in terms of prices between futures contracts and their corresponding underlying assets. This is done in order for them to have returns that are free from risks.

The last type of futures trader would be spreaders. This type of trader is in it to trade futures in combination with other futures contracts. This is done so as to decrease the risks and also to extend profitability of trades. Of course, there is still much more to learn about the different types of trading. What has been written are only their basic definitions. It is quite different when interacting with these traders in the market. Furthermore, there is also something to learn regarding their different styles and strategies in order to get higher returns and lower their risks when it comes to the different types of trading. Thus, learning more about them is essential before actually getting into the trading industry. This is to know how they move in the market and how one would do in order to gain profits.

Images by E-Futures.com and Forbes

The Different Types of Stock Trading

September 14, 2014 by Katherine

For people who are highly interested in trading, they must know the basics first. There are many aspects that a person can look into to learn more about trading. Because of its many facets, a person must learn about trading through a step by step process with the basics as the initial step. In this article, it shall talk about the different types of stock trading. There are basically just three types of stock trading that one must remember, namely, growth-centered trading, value-focused investing, and income-oriented investing. These types of stock trading are ideal to traders with corresponding personalities, time availability, and capital investment.

There are many types of stock trading.

First type of stock trading would be growth-center trading. As the name suggests, this type of trading focuses more on the growth of certain stocks. Thus, this type of trading usually involves new companies with high potential of growth. This is because new companies have more potential to grow and with the growth of the company, its stocks shall also grow in profit. There are also risky ventures that are involved in growth-centered trading which includes buying into a business initial public offering (IPO).

Risks are also involved in growth-centered trading.

Second type of stock trading would be value-focused investing. This type of trading focuses more on the value of the stocks. Thus, traders who are into this type of trading would look more into underpriced stocks that have high potential of performing better than what their value suggests. A method that traders of this type do is looking for companies that have stocks that are priced considerably low when compared to their competitions. On the other hand, make sure to take note of how the stocks are priced low since there are some companies that manipulate its dealings just for their stocks to fall.

Third type of stock trading would be income-oriented investing. Among the three types of stock trading, income-oriented trading would probably the most conservative type. It basically focuses on the preservation of a stock’s capital more than anything else. What is the most important factor for this type of trading are the low price fluctuations. Thus, the objective of this type of trading is a steady income only. Therefore, most traders in this type of trading target the biggest and most well-known companies when looking for or buying stocks. Prestigious or blue chip stocks are usually the target of traders who are in income-oriented trading. This type of trading also poses low risks.

Images by Spottradingllc.com and Forbes