Every trader is different, and knowing in ” Type of Trader ” you fall into can help you identify opportunities better.
Trading is not a simple task if it was easy everyone would do it. Let’s look at different traders in the trading industry as explained by 1.
On the buy-side we have:
- Individuals, corporate pension funds, insurance funds, charitable and legal trusts, Endowments, Mutual funds, and money managers.
- Homeowners, students, and corporations
- Farmers, manufacturers, miners, shippers, financial institutions
- Asset Exchangers:
- International corporations, manufacturers, and, travelers
On the sell-side:
- Market makers, specialists, floor traders, locals, day traders, and, scalpers
- Retail brokers, discount brokers, full-service brokers, institutional brokers, block brokers, and, futures commission merchants
As a result, most of the traders in the cryptocurrency markets are individuals, market makers, day traders, scalpers, and gamblers. We do not include institutions because we believe they are currently not participating in the market.
In addition, let’s then define cryptocurrency traders as individuals who market make, day trade, scalp or gamble away their money in these markets.
How do they trade?
Cryptocurrency traders usually employ 2 different methodologies to trade:
- Fundamental Analysis can be defined as the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. Therefore, the goal is to derive a forecast and profit from future price movements
- Technical analysis is defined, by Investopedia, as a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
In conclusion, this should be enough information to elaborate on an idea of what kind of trader you are. Please comment below, and, let us know in which category you fall in.
1. Harris, L. Trading & Exchanges: Market Microstructure for practitioners
2. Fundamental Analysis: https://www.stockcharts.com/school/doku.php?id=chart_school:overview:fundamental_analysis
3. Technical Analysis: https://www.investopedia.com/terms/t/technicalanalysis.asp