Investors vs Traders

[barjon]

Without starting an argument about the definition of investors and traders - I'm sure you get the drift - here's a question and a statement to challenge.

The Question: What proportion of the daily LSE business in FTSE100 shares is down to investors and what is down to traders.

The Statement: The trend is set by investors and the noise is created by traders.

Just something to keep you entertained whilst you're watching the money tick up

good trading

jon

 

[JTrader]

The Question: What proportion of the daily LSE business in FTSE100 shares is down to investors and what is down to traders.

Hi barjon

I would imagine that the vast majority of daily LSE business in FTSE100 shares is down to short-term traders - as opposed to long-term investors. However, if there are many more investors in FTSE100 shares than traders in FTSE100 shares - and the majority of the limit orders that are displayed on the order book have been left there by investors - I may be wrong.

jtrader.

 

[Strategic Trader]

in stock markets - traders make money - investors lose money - since stocks are not investment quality

 

[LION63]

There are quite a few investors that make decent profits on the stocks they buy and they cannot understand why people would constantly trade in and out of shares thus increasing the risk to capital. It is a case of making a choice.

Volumes and trades are now heavily skewed in favour of traders as opposed to investors. The rise of hedge funds and index tracking funds is a great contributor to this, add the short term and day traders to the equation and the balance is set to shift even further.

I have never seen actual figures but does anyone know how many trades the average day trader does per day/week (independent as opposed to working for a fund or bank)?

 

[roguetrader]

in stock markets - traders make money - investors lose money - since stocks are not investment quality

Not that I am a fan of "investing" but a certain Mr Warren Buffet might disagree with that statement.

 

[Strategic Trader]

a certain warren buffet uses other methods to create value - broadly misunderstood - to his advantage

 

[mauzj]

From what I read of the futures markets 2 years ago about a 3rd of the liquidity was provided by locals. Now a lot of this is provided by hedge funds.

These groups are predominantly short term traders rather than investors.

----------------------------------------
Print money the easy way:
http://financialcharting.blogspot.com/
http://www.financialcharting.com/

 

[thewebmaster]

hmm

well i know i'd definately prefer to be a trader and an investor as you get the benefit of both worlds, bluechips for your retirement fund and biotech's alongside the .com's for the chance of an extra holiday in the sun next year!!!!!

 

[ducati998]

barjon,
Quote;
"The Statement: The trend is set by investors and the noise is created by traders."

This is quite patently incorrect. Investors are concerned with valuation, the preservation of capital, and the implied earning power of their investment. At points of overvaluation, positions will be closed and profits taken. Very often much more will be left in "the trend" this however is of no concern to a disciplined investor.

Therefore, by definition, the extended trends, in excess of valuations, are the province of the speculator.
Investors calculate very carefully where and under what specific conditions we shall be paid, Speculators, however rely upon the "greater fool" theory, and precise timing of the trend or otherwise.

Just as a matter of interest, I can list probably near 20 names of "investors" with public, fully accountable records that have made in excess of $1Billion. How many traders can you name with a comparable record?

Cheers d998

 

[roguetrader]

Just as a matter of interest, I can list probably near 20 names of "investors" with public, fully accountable records that have made in excess of $1Billion. How many traders can you name with a comparable record?

Cheers d998

I'd be interested to see that list, I can think of about 3 or 4 such individuals but evenin that case it would be questionable if their wealth came entirely frominvesting.

 

[ducati998]

RT,
Here is the list. And that is precisely my point, these are PUBLIC records, there is no doubt involved.

Warren Buffett, Charles Munger, Eddie Lampert, Walter Schloss, Edwin Schloss, William Ruane, John Neff, Bill Gross, Martin Whitman, David Dreman, Joel Greenblatt, Peter Lynch, Sir John Templeton, Philip Fisher, Bernard M Baruch, Mario Gabelli, ...............16, so I exaggerated a little.

Cheers d998

 

[ravenglass]

barjon,

Just as a matter of interest, I can list probably near 20 names of "investors" with public, fully accountable records that have made in excess of $1Billion. How many traders can you name with a comparable record?

Cheers d998

John Henry, Monroe Trout, Steven Cohen etc.

 

[techst]

And the traders from Market Wizards first edition, there's a few in there.

 

[RUDEBOY]

70% of daily volume is created by institutional investors, so you could call traders 'noise'.

 

[RUDEBOY]

Saying this investment banks have thier traders, ask anyone who used to work for Barings! Just jokin', of course!