1. Introduction to Stock Trader Types
  2. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  3. Decision-Making Methods: Informed, Uninformed, Intuitive
  4. Informed Traders: Fundamental Traders, Technical Traders
  5. Swing Traders
  6. Buy and Hold Traders
  7. Value Traders
  8. Trend Traders
  9. KISS Traders
  10. Momentum Traders
  11. Range-bound Traders - Break-out Traders - Channel Traders
  12. Options Traders
  13. Options Seller Traders
  14. Day Traders
  15. Pattern Day Traders
  16. Intra-Day Traders
  17. Intra-Day Scalp Traders
  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

Sentiment-oriented technical traders make decisions based on predictable price patterns. They effectively act as dealers or order anticipators because they try to trade before other traders do. As a result, they help to accelerate the impact that other traders will have on the price of a security.

Because of the effort that these traders make to trade before uninformed traders, they tend to make prices more erratic. This has the effect of misrepresenting a true market price for a particular instrument, especially when they trade into a rising asset bubble.

Risks of Sentiment Trading

This type of trading may be very risky because it involves front-running uninformed traders. Uninformed traders may have the effect of moving market prices away from fundamental or intrinsic values. These movements may draw in value traders, who come from the opposing side of the market. The risk is that sentiment-oriented traders may lose to value traders. Successful sentiment-oriented technical traders must know when to close out their positions, or they will lose profit when prices eventually revert to fundamental values.

Traders of this type tend to do best when dealing in instruments which are difficult to value. These instruments are less attractive to value traders, and they often include stocks in developing industries and which are dependent upon uncertain technologies. One example of a type of hard-to-value stock would be one for a blockchain startup. There is a great degree of interest in this area of technology, but the broader understanding of how the blockchain works is not as strong as for some other industries.

Successful sentiment-oriented technical traders tend to factor in expected inflation, future political uncertainty, and the equity risk premium into their thinking. In the cases of stocks, bonds, and precious metals, uninformed traders may significantly affect prices, and sentiment-oriented technical traders may be able to achieve a profit.


Intuitive Traders
Related Articles
  1. Trading

    Introduction to Stock Trader Types

    What type of stock trader are you?
  2. Trading

    Day Trading: An Introduction

    This article takes an objective look at day trading, who does it, and how it is done.
  3. Personal Finance

    5 Skills That Traders Need

    There are many routes to becoming a professional trader, but these five skills will help you get there.
  4. Trading

    The 10 Worst Mistakes Beginner Traders Make

    Traders generally buy and sell securities more frequently and hold positions for much shorter periods than investors, which can result in costly mistakes.
  5. Trading

    Know Your Counterparty When Day Trading

    This can provide insight into how the market is likely to act based on your presence, orders and transactions.
Trading Center