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This trader usually adopts a strategy of long-term buying. As regards DOW JONES, the average annual rate of return ranges from 5% to 10%. This long-term strategy may be good for many investors who prefer to invest money rather than keep it in a bank account with low interest rate. There is always a risk of long-term investments, but there are tools that allow you to minimize it.
Fundamental traders are usually highly methodical, with a good knowledge of a specific asset and usual factors that impact the valuation of that asset. They focus on the economic situation, taking into account the reports of fundamental importance. They pay attention to the decisions of central banks (FED, ECB, and other). While punting on oil, they observe the data on oil reserves and keep track of OPEC actions.
Technical trader aims at using historical price trends, assuming that the history has a tendency to repeat itself. He observes the developments on charts in various time periods (minute by minute, hour by hour, day by day), paying attention to support, resistance, price formations, trends, and other technical analysis methods. He does not take into consideration the newest economy news. Technical trader is only focused on a price chart. He closely observes the movement of prices, their development, looking for a favourable situation to open or close a position.
Swing traders maintain their position for more than one day but no more than several weeks. Their strategies are based on technical analyses of major trends and price formations. They are able to make a profit thanks to well-established trends that they join as part of local corrections. Large price fluctuations in strong trends allow them to make a profit.
They make many transactions every day, taking advantage of small traffic on the market. They are extreme opportunists who act on a short-term basis, trying to use all the possibilities as well as they can, especially in the event of increased market instability. They are known for “chasing” the markets, and they feel and understand them very well thanks to their frequent involvement in trade. When there are losses, they cut them quickly. They do not allow emotions to get the better of them.