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. Personal Finance

    A day in the life of a day trader

    Day trading has many advantages, and while we often hear about these perks, it's important to realize that day trading is hard work.
  3. Trading

    What Type Of Forex Trader Are You?

    Timing may be the key to uncovering your true strength as a forex trader.
  4. Investing

    The Roles of Traders and Investors

    Discover how these two groups work together to keep the market functioning properly.
  5. Trading

    What Can Traders Learn From Investors?

    Discover tips from a long-term strategy that can help you make better short-term trades.
  6. 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.
Frequently Asked Questions
  1. What is the role of the nation-state in globalization?

    Learn about the evolving role of the nation-state in an increasingly globalized world as fewer boundaries restrict international ...
  2. What are some examples of positive correlation in economics?

    Learn the most common examples of positive correlation in macroeconomics and microeconomics, including demand and price, ...
  3. Human capital vs. physical capital: What is the difference?

    Learn the difference between physical capital and human capital. How to find the value of each type of capital in a company's ...
  4. Which factors can influence a country's balance of trade?

    Find out about the factors that affect a country's overall balance of trade and how it is used as an economic indicator.
Trading Center