Trades can be categorized
1. Quantitative trading
2. Macro analysis
3. Fundamental based trading
4. Market makers or brokers
5. Technical analysis-based trading
1. Quantitative traders
Quantitative traders form their trading assumptions based on mathematical formulas. They attempt to find trading opportunities in the markets based on mathematical equations and calculations.
2. Macro traders
Macro traders employ a style that is related to most economists or mutual fund managers. They look at overall market trends and economic factors and trade on a very macro level. This type of trading is not for the average person because average people do not have the account size to trade this way.
3. Fundamental traders
A trader who uses fundamental analysis trades based on the financial health of a company. Such fundamental traders use accounting ratios and financial statements to create their ideas of a market’s direction.
4. Market makers or brokers
There are also traders who trade based on order size and volume; they are sometimes referred to as market makers or brokers. These traders work at the trading exchange, providing liquidity in the market. They trade with any other trader (like you or me) and make their profits based on the spreads they earn from the traders on the other side of a transaction.
5. Technical traders
Finally, there are technical traders. This is the type of trading that I think is most valid for traders, especially those who are trading small accounts, but this skill is rarely discussed until now. Technical traders will use chart patterns to find trades. They use interpretations of levels of support and resistance to develop their trading assumption. Techni cal analysis, as with any other form of analysis, can get very complicated quickly, but it doesn’t have to. This book will discuss how to read charts using technical analysis in a practical way. This type of analysis keeps my opinions grounded in what is happening in the markets at the time and has served me well.
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