The number of trader types can vary depending on the classification method, but there are broadly two main categories:
Based on Trading Style:
Day Traders: Buy and sell stocks within the same trading day. They dont hold the scrip for the next day. If their profit target is achieved they book it and remain on the sidelines for the day. The same is true in case of loss. They book loss as soon as it reaches their loss bearing threshold. This type of trading requires utmost attention as a few minutes can make or break them.
Swing Traders: Hold positions for a few days to weeks, aiming to capture price swings. They usually trade based on weekly / monthly time frame and buy or sell a stock at lows or highs of the scrip. This type of trading does not require real time interaction by ths user.
Position Traders: Hold positions for weeks or months, focusing on longer-term trends. As the name suggests users will hold a scrip for as much time required till their desired price is achieved.
Investor: Holds positions for years, primarily focused on long-term growth. These are the type of people who hold a script till their desired price is achieved no matter if its takes 5 or 10 years. Investors not only hold a scrip for capital gain. They also hold it to receive payout from the companies.
Based on Trading Approach:
Fundamental Traders: Analyze company financials, economic indicators, and industry trends to make investment decisions.
Technical Traders: Rely on charts, patterns, and indicators to predict price movements.
High-Frequency Traders (HFTs): Use complex algorithms to execute trades at extremely high speeds.
Algorithmic Traders: Employ computer programs to automate trading decisions based on predefined rules.
Options Traders: Trade options contracts to profit from price movements or to hedge existing positions.