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Stock Trading Individuals / firms when trading equity (stock) on
the stock markets as their principal capacity are called stock
trading. Stock traders usually try to profit from short-term price
volatility with trades lasting anywhere from several seconds to
several weeks. The stock trader is usually a professional. A person
can call themself a full or part-time stock trader/investor while
maintaining other professions. In this case, the financial manager
could be an independent professional or a large bank corporation
employee. This may include managers dealing with investment funds,
hedge funds, mutual funds, and pension funds, or other professionals
in equity investment, fund management, and wealth management.
Several different types of stock trading exist including day
trading, swing trading, market making, scalping (trading), momentum
trading, trading the news, and arbitrage.
Stock traders in the trading floor of the New York Stock Exchange.
On the other hand, stock investors purchase stocks with the
intention of holding for an extended period of time, Many
investors believe in the buy and hold strategy, which as the name
suggests, implies that investors will hold stocks for the very long
term, generally measured in years. This strategy was made popular in
the equity bull market of the 1980s and 90s where buy-and-hold
investors rode out short-term market declines and continued to hold
as the market returned to its previous highs and beyond. However,
during the 2001-2003 equity bear market, the buy-and-hold strategy
lost some followers as broader market indexes like the NASDAQ saw
their values decline by over 60%. |
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