Types of Traders
Typically, market participants are divided into two general categories, investors and traders, although most fall somewhere in between. Investors usually focus on the long-term horizon. They plan on holding stocks for months to years and look for capital appreciation.
Traders, on the other hand, are typically in the market for much shorter time frames. Their goal is to create monthly cash flow. Positions are typically closed within minutes to days, possibly weeks.
Professional Traders make their living trading the markets, with the goal of creating cash flow. If they lose all of their trading capital, they are out of business. Professionals utilize risk-management strategies to reduce trade risk and hedge positions. Traders that do not use solid money management as part of their trading business will eventually fall victim to the market.