Trader

AAA

DEFINITION of 'Trader'

An individual who engages in the transfer of financial assets in any financial market, either for themselves, or on behalf of a someone else. The main difference between a trader and an investor is the duration for which the person holds the asset. Investors tend to have a longer term time horizon, whereas traders tend to hold assets for shorter periods of time in order to capitalize on short-term trends.

INVESTOPEDIA EXPLAINS 'Trader'

One main problem with engaging in short-term trading is commission costs. Because traders frequently engage in short-term trading strategies to chase after profit; they often rack up large commission fees. However, an increasing number of highly competitive discount brokerages has made this cost less of an issue.

RELATED TERMS
  1. Trading Rut

    A period of investing during which a trader fails to earn profits ...
  2. Overextension

    A loan or extension of credit that is larger than what the borrower ...
  3. Blue Collar Trader

    A trader who has another source of income, and does not trade ...
  4. Pattern Day Trader

    An SEC designation for traders who trade the same security four ...
  5. Day Trader

    A investor who attempts to profit by making rapid trades intraday. ...
  6. Commercial Trader

    A classification used by the Commodity Futures Trading Commission ...
RELATED FAQS
  1. What are the disadvantages of an index fund over an actively managed fund?

    An actively managed fund – more commonly referred to as a mutual fund – has a higher risk versus reward value, is much less ... Read Full Answer >>
  2. How does a company decide when it is going to split its stock?

    There are no set guidelines or requirements that determine when a company will split its stock. Often, companies that see ... Read Full Answer >>
  3. Why are some spin-offs taxable and some are tax-free?

    The manner in which a parent company structures the spinoff and divests itself of a subsidiary or division determines whether ... Read Full Answer >>
  4. Which has performed better historically, the stock market or real estate?

    For the majority of U.S. history – or at least as far back as reliable information goes – housing prices have increased only ... Read Full Answer >>
  5. What's the difference between cash-on-delivery differ and delivery against payment?

    Cash on delivery and delivery versus payment describe different procedures and timing of payments. Cash on delivery describes ... Read Full Answer >>
  6. How do I use Trade Volume Index (TVI) to create a forex trading strategy?

    The trade volume index (TVI) indicates whether a security is being accumulated or distributed and is calculated using intraday ... Read Full Answer >>
Related Articles
  1. Active Trading

    How To Break Bad Trading Habits

    It isn't making money on each trade that counts, but developing a long-term plan that works.
  2. Investing Basics

    Are You Investing Or Gambling?

    We look at ways in which gambling creeps into trading, and what may drive an individual to trade - or gamble - in the first place.
  3. Investing Basics

    The Roles Of Traders And Investors In The Marketplace

    Discover how these two groups work together to keep the market functioning properly.
  4. Active Trading Fundamentals

    An Introduction To Day Trading

    This article will take an objective look at day trading, who does it and how it is done.
  5. Options & Futures

    6 Steps To Successfully Switching Financial Careers

    Save time and money by following these tips to a smooth career transition.
  6. Forex Education

    Is Pressing The Trade Just Pressing Your Luck?

    Scaling up into a trade can be a lucrative strategy, but you need to understand the risks involved.
  7. Active Trading

    Random Reinforcement: Why Most Traders Fail

    This phenomenon can cause a trader to abandon a proven strategy or risk everything on chance. Find out how to avoid it.
  8. Options & Futures

    Trading's 6 Biggest Losers

    These "rogue traders" are famous for their billion-dollar mistakes.
  9. Active Trading

    Fundamental Analysis For Traders

    Find out how this method can be applied strategically to increase profit.
  10. Investing Basics

    Understanding Open-End Funds

    An open-end fund is a type of mutual fund that does not limit the amount of shares it issues, but issues as many shares as investors are willing to buy.

You May Also Like

Hot Definitions
  1. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  5. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  6. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
Trading Center