The stock market, where, as is well known is represented by exchange-based institutions. Meanwhile, private financial speculators, who usually trade remotely on the markets for financial assets and who do not have any institutional status, can trade in securities, shares and so on. In other words, such private traders may be real subjects of trade relations in the stock market.
In principle, experts identify two main ways of making money from securities transactions in the stock market:
• earn as a stock market trader (speculator);
• earn as a stock market investor.
First of all, it should be noted that these two ways of earning on the stock market have one common feature, which is that the factor of income on them is the variability, the dynamism of the market value of securities listed on the respective exchanges. In other words, a speculative trader has the opportunity to make money on securities transactions, making bets on raising or lowering their market rate in the foreseeable future.
Stock Market Trader
A trader (speculator) making regular trade deals directly on the stock market focuses primarily on taking profits in short-term positions. The length of time that speculators hold such positions in the open market usually ranges from a few minutes to several days.
After such a short (by the standards of the stock market) period, a typical speculator closes his deal (position) and states a certain financial result. The financial instrument (asset) that a speculator has to trade on the stock market, in fact, does not matter to him. It can be absolutely any security listed on the relevant exchange.
For a stock market trader, it is crucial that the market for this asset is characterized by a relatively high degree of volatility of a rate and a high level of liquidity of operations. Rate fluctuations are of great importance for the profitability of trading operations carried out by the stock market speculator.
A speculative trader is a player of the active type.
He uses all the tools available to him in his work:
• identifies trends relevant to its target market;
• uses proven technical analysis tools;
• uses key indicators of fundamental analysis;
• monitors trading signals, relevant news, and other relevant information.
Stock Market Investor
Unlike a short-term speculator, a stock market investor is focused on making long-term profits. The terms he usually considers for investing his funds exceed a period equivalent to one year.
It is characteristic that an investor acquires a share, considering it as a stake in the relevant business or as an asset that can generate long-term profit. An investor earns not on a speculative difference, but on an increase in the market value of a particular business and on dividends, which are brought to him by the very fact of participation in this business.
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