The financial traders in the finance market, their function and some other details
In the most basic meaning, a trader is a person in a section who earns his living by trading different kinds of materials. There are many kinds of traders available in the society who trade for their earning. From a street vendor to a businessman, each and everyone can be placed in the section of traders. Among those traders, the financial traders are also another category. They earn their living in the trading business which is related to the trading of financial materials. The financial matters range from the financial instruments or the stocks bonds and derivatives or commodities etc. they are appropriately termed as stock traders in the stock or the finance market. The main function of the stock brokers is to make a deal between a buyer and a seller. They are involved in the buying and selling of bonds. They are also responsible for giving advices to the shareholders as what way to follow and which stocks should be picked. They also help to manage the portfolio of the share holders.
The types of traders
There are many types of stock traders available in the market financial market. The stock traders vary according to their function or the role they play in the market. They can also be differentiated by the way they chose to behave to the securities in the market. Among the several other types, the main types are they speculators, the investors, the hedger and the arbitrageurs.
The investors deal in the market by purely by purchasing a company’s share and gaining profit from the share. The profit mainly comes by the interest of the money or the appreciation of values. This is the way the investors do their job. Another kind of finance trader is a speculator. The main difference of a speculator and an investor is that, while the investor is concerned about the price of the share he bought, a speculator is concerned about the fluctuation of the market price. The speculators gain their profit by dealing in the ups and downs of the market price. A hedger is the person who is in the position of “Hedge”. In the most common terms, the hedging is the job which deals in the reducing of the potential gain or loss which is a certain company subjected to. They also come in the section of the financial traders. There are many financial instruments by which a hedge can be constructed. Among those, the prominent ones are the socks, the insurances, forward contacts or the exchange traded funds. The arbitrageurs are the ones who are associated with the arbitrage in the market. The arbitrage is the section in which the financial trader gains the profit by the price variation between two markets.
Choosing the stocks
In the stock trader jobs, the main thing is to decide which stock is to be chosen to ring out the maximum amount of profit from them. Picking up the stocks is the trickiest thing that the stock traders have to muster in order to build a career in the stocks. Though there are several courses which offer to give the persons some insight view of the market and the trick of the picking up the right securities, but the fact is, they can be hardly helpful in the real field. This is because of the EMH or the efficient market hypothesis. This theory tells to the stock traders that, any amount of knowledge in the field in not helpful. This EMH plainly and unequivocally states that no investors can predict and expect return from their invested money.