Trading style and information

Trading, by large, can be grouped as buy-and-hold and swing trading. The centruary buy-and-hold is seen everywhere from individual investors. Despite of what entry point, buy-and-hold would ignore temporary ripples and focus on long term. The basic idea is that as long as companies invested are not folded, they would find next investor who is willing to pay higher price. For current investors, it shun off loads of efforts to the companies. That is two way: investors may not have resources to obtain abundant company information but focus on very fundamental stastistics. This method always get 100% win rate since no one wants to sell when they are at loss but till gain.

On the other hand, swing traders like professional investors spend lots of time doing research. They believe they have advantage over others, including other professional investors in a way such as the availability of critical trading information. For these investors, every trend or momentum of the market is more predictable and shouldn't be ignored. In other words, active trading can beat buy-and-hold as long as they have more information than others.

Investment theory quite often presumes that all investors share all information. That is not true because even the resource is the same for all investors but the reading of public information is not. Some professional investors can always decipher useful trading tips and remain them as upper hand in trades. This has nothing to do with insider trading information. As said by Jack Treynor, the long-time Financial Analysis Journal editor, you may not get rich by using all the available information, but you surely will get poor if you don't.

Professional investors can have another advantage, they can distinguish noises out of information. It is naive to say there all market information is relevant or rational. Individual investors often are influenced by market fluctuations and emotions and scarcy of relevant information. On the contrary, professional investors are full-time and performance driven. As experience grows on the market, it is little doubt that they will have edges over others.