Understanding Some Of The Different Types Of Investors

The investment world is filled with a countless array of various types of investors. One may consider themselves a day trader, a short-term investor or a long-term investor. Many may categorize themselves as options traders or may simply focus on trading bonds and energy futures. No matter what category one falls under, it is important to understand the fundamental goal of any trader, high yields and even higher profits. Keep in mind there are thousands of different types of investors, and no investing niche is better than the other. That is why it is vital to learn about some of the most recognized investment styles as a beginner to investing.

The day trader by far and away takes on the most risk in any type of investment style. Positions are being bought and sold at a breakneck pace in the hopes of making daily yields. One must constantly look at individual stock volatility, volume indicators and very short term moving averages. This style currently runs at about a 5 to 10 percent success rate for those who attempt it. You must be thoroughly educated in the markets you are dealing with and have some extensive experience when it comes to making daily trades for profit. This is not for the faint of heart and no completely inexperienced investor should ever attempt it.

The short-term investment philosophy deals with those who will hold a position a little longer than a day. Obviously high yields and profits are the ultimate goal, but this style calls for one to hold the position for weeks, if not months. There is less risk involved, but it still calls for one to continually follow the markets and understand daily and weekly price and volume movements. This type of analysis will tell you when to move out of the stock or bond.

Obviously, long-term positions are held for months, and in some cases years. The goal is to ultimately find a dividend paying stock, which will produce a guaranteed yield year in and year out. This is well known for being the most conservative investment style in any market. Many will look to foreign exchange traded funds that act like mutual funds that keep risk at a minimum buy track the stock market of established and developing countries. Many others will look to what are known as exchange traded funds that follow individual markets such as the Dow and NASDAQ. Because of the mutual fund style ETF’s are noted for, many long-termers look for the highest dividend paying ETF, which completely fits this philosophy.  Most investment clubs would fall into this category.

Those are but a few of the many types of investors that have been categorized in any market. Although one niche has never been proven to be better than another, but rather a purely subjective and opinion based approach in any given method. That is why any beginner should understand some of the more commonly used terms (such as technical analysis and fundamental analysis) and wrap the terms around a method they are most comfortable with. Any successful investor in any field will tell you that they started with the absolute basics.