Who is a stock|Forex|Commodites Trader ?

Who is a Trader

         A trader is a person or entity, in finance, who buys and sells financial instruments such as stocks, bonds, commodities, derivatives, and mutual funds in the capacity of agent, hedger, arbitrageur, or speculator. 

Types of Traders

Traders buy and sell financial instruments traded in the stock markets, derivatives markets and commodity markets, comprising the stock exchanges, derivatives exchanges, and the commodities exchanges. Several categories and designations for diverse kinds of traders are found in finance, these may include:

 1.   Floor trader

A floor trader is a member of a stock or commodities exchange who trades on the floor of that exchange for his or her own account. The floor trader must abide by trading rules similar to those of the exchange specialists who trade on behalf of others. The term should not be confused with floor broker. Floor traders are occasionally referred to as registered competitive traders, individual liquidity providers or locals.

These traders are subject to a screening process before they can trade on the exchange. The people who operate as floor traders are in an open outcry system that has slowly been replaced by automated trading systems and computers that work in the same fashion as humans, without the interaction of people buying and selling stocks. 

 2.   High-frequency trader

High-frequency trading is a type of algorithmic financial trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools.While there is no single definition of HFT, among its key attributes are highly sophisticated algorithms, co-location, and very short-term investment horizons. HFT can be viewed as a primary form of algorithmic trading in finance. Specifically, it is the use of sophisticated technological tools and computer algorithms to rapidly trade securities. HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second.

3.  Pattern day trader

In the United States, a pattern day trader is a Financial Industry Regulatory Authority (FINRA) designation for a stock trader who executes four or more day trades in five business days in a margin account, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period.

A FINRA rule applies to any customer who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period; the rule applies to margin accounts, but not to cash accounts. A pattern day trader is subject to special rules. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account. The required minimum equity must be in the account prior to any day trading activities. Three months must pass without a day trade for a person so classified to lose the restrictions imposed on them. Pursuant to NYSE 432, brokerage firms must maintain a daily record of required margin.

4.  Rogue trader

A rogue trader is an employee authorized to make trades on behalf of their employer (subject to certain conditions) who makes unauthorized trades. It is most often applied to financial trading, when rogue professional traders make unapproved financial transactions.

This activity is often in the grey area between civil and criminal transgression, because the perpetrator is a legitimate employee of a company or institution, yet enters into transactions on behalf of their employer without permission.

5.  Stock trader

A stock trader or equity trader or share trader is a person or company involved in trading equity securities. Stock traders may be an agent, hedger, arbitrageur, speculator, stockbroker. Such equity trading in large publicly traded companies may be through a stock exchange. Stock shares in smaller public companies may be bought and sold in over-the-counter (OTC) markets.

Stock traders can trade on their own account, called proprietary trading, or through an agent authorized to buy and sell on the owner’s behalf. Trading through an agent is usually through a stockbroker. Agents are paid a commission for performing the trade.  

Credits : Wikipedia