13 Types Of Wall Street Players

One of my trading challenge students LOVES writing blog posts and thank god for her!

Julie wrote this great post explaining exactly what a penny stock is and this post describing all sorts of basic stock market terms.

She has her own blog HERE, but check out her latest guest blog post for me detailing the various types of Wall Street players:

Wall Street Players: Which One Are You?

So who exactly is involved in the stock market? There are a lot more people trying to make a profit that you would imagine, and each of them has a different strategy. This post will tell you who these players are, and which type of player you want to be. Better yet, it will tell you who you DON’T want to be.

Amateurs. Chances are, many of the people reading this post will fall into this category. These are the people that are considered “suckers” by the other players. They are looking to make a quick buck without doing the work. To those of you who want to move out of this category, I suggest you sign up for some of Tim’s Alerts or his trading challenge. Lazy people get slaughtered in this game.

Independent/Proprietary Traders. These players are trading with their own capital. They can be somewhat or very sophisticated in the type of research and trading tools that they use. They do trade penny stocks in some cases, although they are more likely to play stocks like $AAPL and $MCD.

Market Makers. These are professional security dealers, and they influence on penny stocks. They are broker-dealer firms that accept risk in order to facilitate trading in a particular stock. When the market maker takes a position in a stock, they immediately reverse that position by buying/selling that stock. This process takes a matter of seconds.

Institutional Traders. These players work for large firms and never trade penny stocks. These individuals hold a larger amount of capital and hold their positions for a longer period of time. When they do buy or sell, they trade a large number of shares at one time.

Hedge Fund Managers. These players have incredibly flexible investment allowances, they use leverage (meaning they trade stocks worth more than the amount of capital they have on hand, essentially taking out a loan from a broker), and sometimes trade penny stocks. These players have very wealthy individuals give them a large sum of funds that they then trade and give a portion of the return back to the investor.

Financial Planners. These players meet with individuals and set up a “financial plan” for them. They can help them save for retirement, their children’s college education, etc. They do not trade penny stocks.

Mutual Fund Managers. These players must have a high level of education and several certifications. They look for longer term plays and higher priced stocks. They do not trade penny stocks and are irrelevant to penny stocking.

Concept Investors: These people trade penny stocks for their “long term” potential. If you plan on being one of these people, I also suggest you buy Tim’s DVD’s first, unless you want to lose a lot of money…

Value Investors. These players rarely trade penny stocks. They look at companies with solid fundamentals such as earnings growth, profit margin, forward p/e (price to earnings) etc.

Growth Investors. These players invest in fast growing companies with stock price momentum. Think of the internet net bubble before it burst, and that is what stock price momentum refers to.

Penny Stock Pickers/Newletters. These are services that promise huge returns on their “stock picks” when in fact they are compensated by company insiders to pump the stock prices up so those who pay the newsletter dump their shares at inflated prices. One word describes them: SCAMS! Say it with me, S-C-A-M-S! There are some reliable one’s out there, such as Timothy Sykes, but they are few and far between. Tim will help you distinguish between them.

Analysts. These individuals analyze higher priced stocks, mostly irrelevant to penny stocks. These players work for larger firms or media outlets, analyzing stocks like $AAPL, $GLD, and $FB.

Securities and Exchange Commission (SEC). Think of umpires and referees. This player can throw people out of the industry for breaking the rules. There are a lot of rules that people do not know about, especially amateurs, so I suggest you buy Pennystocking by Tim Sykes if you need more information. The last thing you want is to make a mistake and get banned from trading.

Posted in Basics, Guest Posts

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  • Chicagowaylandstar

    =)

  • traderespecial

    Thanks for sharing

  • munchers09

    Nicely written!

  • buttplugmonkey

    You should throw in HFT’s in there.