There are different types of online stock traders and we wanted to further clarify the distinction. We are not saying one is better than another, all trading methods can be successful if approached in the right way, but we wanted to help you identify the differences and help you decide on the best approach for you.
A lot of people think all stock traders are day traders. It fits the image of the guys staring at the screen and tearing their hair out or jumping for joy. (We’ve even got some pics like that on this site!)
Well, we’re not Day Traders but what are they, what do they do?
Principally, what marks out a Day Trader from any other type of trader is that they never hold a position overnight. They will trade, perhaps may times during the day in a particular position but always close out the position before the market close. Win, lose or draw.
Some people liken this to high stakes poker or Russian Roulette and it has that edgy glamor to it. If Day Trading is your bag, fine. But it’s not what we’re about. We’d rather take a much more relaxed (and less risky approach.)
Swing Traders operate in much the same way as Day Traders but are not ‘forced’ to close their positions at the end of each trading day. Rather they will, if necessary, hold positions for a few days before closing them but rarely for more than a week.
This is where we come in and we think you should too, particularly if you are relatively new to the stock trading game. Position Traders can hold positions from anywhere from a few minutes to a year or more. Position traders use both fundamental and technical analysis to assess when to enter and exit positions whereas Day and Swing Traders rely most heavily on technical analysis only.
A quick word on positions.
We have deliberately used the word ‘positions’ in this article. The reason being a position can either be a long position (buy and hold) or a short position (selling short). You can enter and exit either position.