Types of Day Traders - Who are they?

June 15, 2010 - PRLog -- "What types of daytraders are there in foreign exchange currency trading?  That is a question that Proforexroom gets asked constantly.  Our live forex trading room has the best of both worlds" PFR said today.  Proforexroom http://www.proforexroom.com went on to say that "we have a former institutional trader as well as cater for the retail trader"  "Our trader has a background in institutional foreign exchange having worked for major banks in Europe and knows how these guys trade... he also has the skills to make trades and a system where during the course of the European trading session members can see how he sets up his trades, lays out his screen, hear him discussing the forex market news, strategies he is thinking of doing and trades he is thinking of making.  As far as valuable forex education, our http://www.proforexroom.com is top notch education for traders.  It doesnt matter whether your new to the market or an intermediate level experienced trader theres a place to follow our room and profit from making foreign exchange trades"

PFR or proforexroom.com released today a link to its members an explaination which is available for reading on wikipedia http://en.wikipedia.org/wiki/Day_trader


"There are two major types of day traders: institutional and retail.

An institutional day trader is a trader who works for a financial institution. This type of trader has certain advantages over retail traders as he/she generally has access to more resources, tools, equipment, large amounts of capital and leverage, large availability of fresh fund inflows to trade continuously on the markets, dedicated and direct lines to data centers and exchanges, expensive and high-end trading and analytical software, support teams to help, and more. All these advantages give them certain edges over retail day traders.

Retail day traders:
A retail day trader is a trader who works for himself, or in partnership with a few other traders. A retail trader generally trades with his own capital, though he may also trade with other people's money. Law has restricted the amount of other people's money a retail trader can manage. In the United States, day traders may not advertise as advisors or financial managers. Although not required, nearly all retail day traders use direct access brokers as they offer the fastest order entry and to the exchanges, as well as superior software trading platforms.

In the past, most day traders were institutional traders due to the huge advantages they had over retail traders. However, since the technology boom in the second half of the 1990s, advances in personal computing and communications technology, realized in the accessibility of powerful personal computers and the Internet, have brought fast online trading and powerful market analytical tools to the mainstream. Low, affordable commissions from discount brokers as well as regulation improvements in favor of retail traders have also helped level the trading playing field, making success as a retail trader a possibility for many and a reality for some.

An auto trader is the person who performs auto-trading, which stands for automated trading and the use of computer programs and other tools to enter trading orders. Because this all happens with the help of the computer algorithm it is also called algorithmic trading.

Day traders' objective is to make profits by taking advantage of small price movements in highly liquid stocks or indexes as well.
A day trader who wants to achieve success needs appropriate knowledge, equipment, tools and markets together with the ability to trade the right trading systems. A day trader with the right information will be able to succeed, otherwise, success will go to the other person in the transaction or to the broker, if he happens to be the best informed person in the transaction.

Besides all these technical requirements some personal traits are also necessary. They include the right psychological and emotional traits. Two emotions that the day trader faces and should manage are fear and greed. A balance between these two emotions is necessary to achieve successful trades. [2]

Also, a successful day trader needs to know which stocks to trade, when to enter the trade, and when to get out of the trade. Part of this knowledge is to find those stocks with liquidity and volatility, in order to generate profits. [3]

Day trading,as part of the market timing, however, is an activity that academics do not support. They question the market timing and believe in the efficient market theory. However, market timing is not illegal and it is not considered unethical. And, basically, the activity was questioned because mutual fund companies had established in their prospectuses that short-term trading was forbidden, and still some clients were allowed to do it.

Although the activity can be profitable, it requires effort to be put on and is a difficult skill to master. Many people expect to make large profits with little effort, and the fact is that around 80% of day traders lose money. [4]" SOURCE: http://en.wikipedia.org/wiki/Day_trader

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Whether your new to currency trading or a seasoned trader, proforexroom is designed to either teach or follow alongside the traders in the room. Proforexroom is a live currency trading room each day during the European fx session in English & Italian.