Price Traders
  1. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  2. Decision-Making Methods: Informed, Uninformed, Intuitive
  3. Informed Traders: Fundamental Traders, Technical Traders
  4. Swing Traders
  5. Buy and Hold Traders
  6. Value Traders
  7. Trend Traders
  8. KISS Traders
  9. Momentum Traders
  10. Range-bound Traders - Break-out Traders - Channel Traders
  11. Options Traders
  12. Options Seller Traders
  13. Day Traders
  14. Pattern Day Traders
  15. Intra-Day Traders
  16. Intra-Day Scalp Traders
  17. Introduction to Stock Trader Types
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion

Price Traders

The price trader is the analyst who tries to figure out exactly what a stock is worth.

Price traders are the most common type of trader in the stock market. Price traders buy a stock based on a fixed price. For example, they study Apple Computer (Nasdaq: AAPL) and determine that based on the company's public information as of August 2013, the stock is worth $400 or $425 or $387.25 a share. Price Traders buy the stock if it is below that value and sell the stock if it is above that value.

Because of price traders, stocks often trade up to a certain value and stop. Stocks also tend to trade between values quickly. For example, stocks - any stocks - tend to be more volatile when their stock price is between $45 and $50 as well as $90 and $100.

Some stocks also tend to "trade on the fives and tens" - meaning that the stock will trade at $5, move very quickly to $10, and then move very quickly to $15. This is due in part to option strike prices, which have either $5 or $10 separation in strike prices. Stocks with $5 option strike prices will often trade at the $2.50 level as well. This phenomenon is often seen most clearly at the end of a month when option expiration occurs.

Price traders never arrive at the same value for a stock. Given the hundreds, perhaps thousands, of individual criteria that can affect stock value, the only way two price targets end up being the same is by agreement or cohesion among analysts. As such, stocks tend to move quickly between common price targets.

In the end, the systems used by traders to buy and sell stocks force them to be price traders and traders tend to enter round numbers into these systems. This creates a situation where stocks tend to trade to round numbers: $1.00, $0.50, $0.25 and $0.75.

Detrimental Traders

  1. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  2. Decision-Making Methods: Informed, Uninformed, Intuitive
  3. Informed Traders: Fundamental Traders, Technical Traders
  4. Swing Traders
  5. Buy and Hold Traders
  6. Value Traders
  7. Trend Traders
  8. KISS Traders
  9. Momentum Traders
  10. Range-bound Traders - Break-out Traders - Channel Traders
  11. Options Traders
  12. Options Seller Traders
  13. Day Traders
  14. Pattern Day Traders
  15. Intra-Day Traders
  16. Intra-Day Scalp Traders
  17. Introduction to Stock Trader Types
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion
RELATED TERMS
  1. Swing Trading

    A style of trading that attempts to capture gains in a stock ...
  2. Equity Market

    The market in which shares are issued and traded, either through ...
  3. Pinning the Strike

    The tendency of a stock's price to close near the strike price ...
  4. Married Put

    An option strategy whereby an investor, holding a long position ...
  5. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  6. Buy Weakness

    A proactive trading strategy in which a trader takes profits ...
RELATED FAQS
  1. How does the term 'in the money' describe the moneyness of an option?

    Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >>
  2. How can an investor profit from a fall in the price of bank stocks?

    Discover the main ways to take advantage of a fall in bank stocks. Shorting stocks and buying put options can let traders ... Read Answer >>
  3. What happens when a security reaches its strike price?

    Learn more about the moneyness of stock options and what happens when the underlying security's price reaches the option ... Read Answer >>
  4. How can I use equity options to protect my stock portfolio from downturns?

    Learn about stock options, how to use them to hedge stock positions and how they could help to protect stock portfolios from ... Read Answer >>
  5. What is the difference between in the money and out of the money?

    Learn about how the difference between in the money and out of the money options is determined by the relationship between ... Read Answer >>
  6. How is a short call used in a covered call option strategy?

    Learn how short calls are used in a covered call option strategy, what the risks and rewards of this strategy are, and how ... Read Answer >>

You May Also Like

Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center