Dear investor, have a bit of the trader in you

As I write this column, I am reminded of Nifty at 5,700 levels around 26th July, the 900 point free fall that went all the way to 4,720 levels around 26th August and the rebound to 5,100 plus levels till a few days ago and again a sharp 209 point fall on September 22.

How would you view this seesaw completely depends on who you are. Would you identify yourself as a stock market trader or a stock market investor, or both? What should you be during these “uncertain times” when the capital markets are keeping everyone guessing on the direction they may take?

The classical trader is one who tries to profit from short-term price volatility with trades lasting anywhere from several seconds to several weeks. They are professionals in the art of trading. A trader has a defined plan to invest capital in the market in order to achieve a single goal: profit.

They seldom care about what they own or sell as long as they end up with more money than they started out with. Trader strategies are largely driven by market momentum. They may go long or short, enabling “moneymaking” in both the upswing and downswing.

Traders watch trends patiently and sometimes wait for weeks watching and studying market moves before making one of their own. One could well compare traders sometimes to a cheetah that watches the movements of its unsuspecting prey for weeks before making that one leap. Abundant patience, high level

... contd.