LOS j: Discuss the major types of traders, based on their motivation to trade, time versus price preferences, and preferred order types.

Q1. Passive traders emphasize:

A)   time in their trading and use market orders.

B)   price in their trading and use limit orders.

C)   price in their trading and use market orders.

Q2. Information-motivated traders emphasize:

A)   time in their trading and use market orders.

B)   price in their trading and use limit orders.

C)   price in their trading and use market orders.

Q3. Value-motivated traders emphasize:

A)   price in their trading and use limit orders.

B)   time in their trading and use limit orders.

C)   price in their trading and use market orders.

Q4. Jack Steele has just determined using analysis that the prospects for Titan Steel are favorable. He would like to trade before other investors realize Titan’s prospects. What type of trade should he use?

A)   limit.

B)   participate.

C)   market.

LOS j: Discuss the major types of traders, based on their motivation to trade, time versus price preferences, and preferred order types. fficeffice" />

Q1. Passive traders emphasize:

A)   time in their trading and use market orders.

B)   price in their trading and use limit orders.

C)   price in their trading and use market orders.

Correct answer is B)        

Passive traders can afford to be very patient and price, not time is their emphasis. They favor limit orders.

Q2. Information-motivated traders emphasize:

A)   time in their trading and use market orders.

B)   price in their trading and use limit orders.

C)   price in their trading and use market orders.

Correct answer is A)

Information-motivated traders have information that is time sensitive, and if they do not trade quickly, the value of their information will expire. They, therefore, emphasize time in their trades. They use market orders to execute quickly and because these orders are less noticeable.

Q3. Value-motivated traders emphasize:

A)   price in their trading and use limit orders.

B)   time in their trading and use limit orders.

C)   price in their trading and use market orders.

Correct answer is A)

Value-motivated traders are patient and will use limit orders, because price, not time is their main objective.

Q4. Jack Steele has just determined using analysis that the prospects for Titan Steel are favorable. He would like to trade before other investors realize Titan’s prospects. What type of trade should he use?

A)   limit.

B)   participate.

C)   market.

Correct answer is C)

Steele is an information-motivated trader. These traders have information that is time sensitive, and if they do not trade quickly, the value of their information will expire. They use market orders to execute quickly and because these orders are less noticeable.