Types Of  Traders:

                    There are Three Types of Traders

  • Institutional Traders or Whales

  •  HNI-High Net-worth Individual 

  •  Retail Traders 

Institutional Traders:  

                        Institutional Traders are defined as who engaged in the buying and selling of securities of the accounts that they manage any institution or group of people. Institutional Traders have Professional knowledge and more funds. They can manipulate the market easily. Let me explain clearly if one stock is currently trading in 80 rupees means they will analyze about that company stock and they will buy all the stocks then they will increase the price easily to 100 rupees all time high value. Once it reached their target means then they will sell all the stocks. This is the way they will manipulate the market. Sometimes they can easily contact the CEO of the company and orders him to make them a board of directors


Examples of Institutional Traders: Insurance Company, Mutual Funds Company, Pension  Company, Exchange-trader funds

Different Types Of Institutional Traders: 

  • W M Pattern Traders 
  •  Supply Demand Traders 
  •  Trap Pattern Traders 
  •  Stop Hunt Traders etc.. 

 

 HNI(High Net-worth Individual): 

                        HNI is a commonly used term on business channels for super rich investors. It’s also a category that can be chosen when applying for IPO (Initial Public Offering).        Here is no specific net-worth number to be defined as an HNI in India.
  • Generally, any individual who has investable funds ₹ 5 crore or more is considered to be a ‘High Net-worth Individual’.
  • Investible funds does not include investments in real estate. It also does not include any assets which have been purchased without the intention of getting returns from it.
  • For example, the house in which the individual lives, his farm houses or his cars – are not counted under the investible surplus.
  • The extra money that an individual has for investment in appreciating assets – is called as investible surplus.
  • In simpler words, if an individual has a house worth ₹ 5 crore. Car worth 50 lakhs and Bank Fixed Deposits worth 1 crore. He is not an HNI.
  • A single man and he have a professional knowledge like Institutional Traders he is called HNI but he have funds lesser than Institutional traders   


Retail Traders: 

            Retail traders typically invest in stocks, bonds, options, and futures, and they have minimal to no access to IPOs. Most trades are made in round lots (100 shares), but retail traders can trade any amount of shares at a time.

          The cost to make trades might be higher for retail traders if they go through a broker that charges a flat fee per trade in addition to marketing and distribution costs. The number of shares traded by retail traders usually is too few to impact the price of the security.

          Unlike institutional traders, retail traders are more likely to invest in small-cap stocks because they can have lower price points, allowing them to buy many different securities in an adequate number of shares to achieve a better portfolio.

        Retail Traders have less Knowledge in Trading an less funds. It may cause to loss of Money



Strategies Of Retail Traders:

  • Copy Trading  
  •  Signal Followers  
  •  Indicator Traders 
  • SNR Traders
  • Breakout Traders
  • Pattern Traders
  • Scalpers 

Institutional vs Retail Traders:



RETAIL TRRADERS

INSTITUTIONAL TRADERS

An individual investor who buys and sells

securities for his/her personal account and

not for another company or organization.

A trader who buys and sells securities for accounts

they manage for organizations, like a bank, insurance

Company, retirement fund, hedge fund or mutual fund.

Usually get their trading education by

searching the internet. They either makes

little more money in their spare time or

become a  full time trader to enjoy the

      freedom and flexibility.

These traders will typically get an economics,

math or finance degree from a college before

getting a job at a financial institution. They

often start their career as a junior analyst and

work their way up over the years to become a

          senior fund manager.

Retail traders focus on technical systems,

      price patterns and indicators.

Institutional traders focus on fundamentals,

     sentiment and trading psychology.

Retail investors buy and sell stocks in round

lots, where around lot refers to 100 shares.

Institutional investors engage in block trades,

which is an order to buy or sell 10,000 or more shares at a time.

Invests in stocks, bonds, options and/or

               futures.

Invests in stocks, bonds, options and futures,

      but also in forwards and swaps.

The number of traded shares of retail

traders is too few to impact the price of

          the security.

Because institutions are the largest force

behind supply and demand in the securities

markets, they perform the majority of trades

on major exchanges and greatly influence the

          prices of securities.

Often charged a flat fee for each trade

and required to pay retail marketing and

        distribution costs.

Not charged marketing or                     distribution expense ratios.

Small cap stocks have lower price points

that attract retail investors.So, they buy

 many different securities inadequate

numbers of shares to achieve a diversified

            portfolio.

The larger the institutional fund, the higher the

  market cap the traders tend to own. They

don't want to be majority owners in smaller cap stocks to prevent a decrease in liquidity

a point where no one will want to take the other

           side of the trade.


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