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Investor
An Investor allocates funds amongst, and within, different asset classes. Investors can use systematic methods to avoid the short-term chasing of trends, which will reduce their Return on Investment (ROI). They might be wise and lazy investors, or managing institutional portfolios like mutual Funds or Hedge Funds with longterm horizons such as pension funds.
Investors are not sure about those who claim to get extra returns from frequent
Trading such as Scalping, Intraday Trading or Swing trading. For this reason, the Investor assumes you cannot forecast how asset prices will perform in short term, but they will perform well in Long Term. However, some investors might want to justify their view, by showing others how to achieve this without overtrading or ending up with an extreme portfolio.
Unlike the other traders* (day or swing) Investor usually do not use leverage. They illustrate the
Investment process with the use of unleveraged passive exchange traded funds (ETFs).
Semi-automatic traders
Semi-automatic traders live in a world of Opportunity by taking trades taken on both sides (Buying and Selling). Semi-automatic traders use simple rules when it comes to forecasting by how much prices will go up or down by watching resistance levels, support levels, and derivative data, and take trades according to their risk management and position sizing. Basically they have their trading systems in their mind they know when the have to enter, exit if the trade goes wrong, when they have to trail stop loss, when they have to reduce the quantity, when they have to go full throttle.
However, they take trades inside a systematic which will ensure their positions and risk are properly managed. This frees them up to spend more time watching price to come to their levels and making the right call on the market.
The semi-automatic trader are both buyers and sellers, betting for or against asset prices and they are comfortable with leverage and investing with derivatives.. Semi-automatic trader is active in equity index (Nifty, Bank Nifty, Fin Nifty and Midcap Nifty Futures and Options), Forex Market and commodity markets, you can see such traders everywhere, and they are successful and profitable traders
Fully Automated Systems Trader
The Fully Automated Systems Trader is a true believer in the benefits of fully systematic trading.
Unlike the semi-automatic trader and the Investor, they understand and know the benefits to use systematic trading rules to forecast price changes, but within the same common framework for position sizing and risk management.
Many Fully Automated Systems Trader traders think and back test strategies and find trading rules that give them extra profits without having to sit in front of trading terminal and watch price going up and down and let their emotions do trading and face losses,
Others amateur traders are convinced they have any do not have special skill. However, believe there are additional returns available, which cannot be captured just by ‘buy and hold’ mentality, which the middle class do. They can use very simple rules to capture these sources of alternative income. Systems traders either may have access to back-testing software, Spreadsheets, in off-the-shelf packages or bespoke software.
Like semi-automatic traders, Fully Automated Systems Trader traders are comfortable with derivatives ( Futures and options ) and leverage. Although examples given in this article are for futures and options trading, they are equally valid for trading similar assets.
Keep visiting again as in next post we will learn how to design a trading system, fully automatic trading system in 4 easy steps which will help you be financially free, If you like this post do share it in your circle
