How Investor Classification Is Done?
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Investor Classification
Investor Classification is done on the basis of the product they chose to invest and the investment procedure they follow to invest in any of the investment products.
How Investor Classification Is Done?
1. Stock Trader: He is the one who uses the investment product Stock & the investment procedure of Trading.
2. Long Term Investor: He also chooses the investment product as Stock & the investment procedure of going long or buying & holding.
3. Short Seller: He uses the same investment product Stock and the procedure is going short or selling and then buying back.
4. Real Estate Speculator: This person uses investment product as Real Estate and the procedure of speculation or trading.
5. Coin Collector: He uses the investment procedure of going long or buying and holding rare coins.
6. Commodities Future Trader: He chose the investment product as commodity futures contracts in future markets and the procedure of trading.
7. Stock Options Trader: He adopts the procedure of hedging in the stocks option contracts to secure his position of the same stocks.
8. Day Trader: He uses the investment product as stock and procedure of speculating daily.
9. Saver: He just wants to hold his money over the long term by putting his money in the bank.
So, Investors can be classified based on the product they are investing in and the investment procedure they are following to invest in that investment product.
What we also need to understand is that many people in the name of investing are actually doing trading, gambling, speculating, hedging or saving.
Actual Stock Investing is all about analyzing the business that you understand, finding the true value of that business and buying the same business if it’s available cheaper than its true value and holding it for long until the business grows properly.
Any Query? Tweet me at @gurpreet_saluja
Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
