If you like to involve yourselves in the financial market, you could be playing both the role of trader or investor, or you could just choose to be either one of them. Both activities have it own in house strategy and methodology to play around with, you should never mix them together.
Both aims are to make money, but it has its difference between time, strategies and personalities.
Time:
Economic cycle normally range around 7 years, investor follow this cycle closely to make decision when to enter the market and when to get out. But investment could be a long waiting task, because you are the investor, for a company to grow and earn money, it needs time to recover its initial set up cost and only make substantial profit after the business stabilizes.
Trader would enter the market almost everyday, getting in the market in the morning and get out before market close, which call day trading. Some like to have short-term trading range from few days to few weeks. But most of them will exit the market as fast as possible, mostly 6 months.
Strategies:
Investor has only one aim, stock price grow, therefore they like to buy cheap and good stock, and seeing the stock grow after that. Value investing has been started even before Warren Buffet become famous, it was actually come from his great teacher Ben Graham. The strategy is mainly involved buying the securities that are underpriced by some forms of fundamental analysis. Ben advocates the importance of margin of safety, which is the difference between the intrinsic value of stock and its market price. Therefore, investor buy in stock when the market sentiment is bad, economy is slowdown, and the stock market meltdown.
Trader likes both good and bad market, they enter the market anytime. Trading could be higher risk, but it has higher return though. Trader needs to establish a better exit rule than investing, because they are bound by shorter time frame. Traders also use leverage power to assist them for better buying power. Most of time, trader are also trend follower, aiming to follow the trend direction and gain from continuation and exit once they make a quick buck.
Personality:
I would define investor are more patient than trader, as Warren Buffet said, do not invest if you dare not see your portfolio goes down half of its original price. In fact, he said that he will never look at the screen of stock chart which is totally meaningless for him.
But trader needs to make quicker decision than investor, because you are fighting with time. Time is not to your advantage in the trading arena. Besides, trader needs to be more decisive, if you made a loss, forget about it and move on to another trade. Many people are not suitable to be trader because they dwell on to their losses too much.
In conclusion, you may want to categorize yourself which one you love to be, or which one you are suitable to be. Make sure you understand your personality and match it to the job of investor or trader, you will surely find your best suit.
To learn more about options trading, please find out from http://www.TraderWork.com. Always trade with your passion!
I love options trading and I am here to share my humble experiences so that you can be benefited from it. You can find out more from http://traderwork.com/
Always trade with your passion! Cheers!
Both aims are to make money, but it has its difference between time, strategies and personalities.
Time:
Economic cycle normally range around 7 years, investor follow this cycle closely to make decision when to enter the market and when to get out. But investment could be a long waiting task, because you are the investor, for a company to grow and earn money, it needs time to recover its initial set up cost and only make substantial profit after the business stabilizes.
Trader would enter the market almost everyday, getting in the market in the morning and get out before market close, which call day trading. Some like to have short-term trading range from few days to few weeks. But most of them will exit the market as fast as possible, mostly 6 months.
Strategies:
Investor has only one aim, stock price grow, therefore they like to buy cheap and good stock, and seeing the stock grow after that. Value investing has been started even before Warren Buffet become famous, it was actually come from his great teacher Ben Graham. The strategy is mainly involved buying the securities that are underpriced by some forms of fundamental analysis. Ben advocates the importance of margin of safety, which is the difference between the intrinsic value of stock and its market price. Therefore, investor buy in stock when the market sentiment is bad, economy is slowdown, and the stock market meltdown.
Trader likes both good and bad market, they enter the market anytime. Trading could be higher risk, but it has higher return though. Trader needs to establish a better exit rule than investing, because they are bound by shorter time frame. Traders also use leverage power to assist them for better buying power. Most of time, trader are also trend follower, aiming to follow the trend direction and gain from continuation and exit once they make a quick buck.
Personality:
I would define investor are more patient than trader, as Warren Buffet said, do not invest if you dare not see your portfolio goes down half of its original price. In fact, he said that he will never look at the screen of stock chart which is totally meaningless for him.
But trader needs to make quicker decision than investor, because you are fighting with time. Time is not to your advantage in the trading arena. Besides, trader needs to be more decisive, if you made a loss, forget about it and move on to another trade. Many people are not suitable to be trader because they dwell on to their losses too much.
In conclusion, you may want to categorize yourself which one you love to be, or which one you are suitable to be. Make sure you understand your personality and match it to the job of investor or trader, you will surely find your best suit.
To learn more about options trading, please find out from http://www.TraderWork.com. Always trade with your passion!
I love options trading and I am here to share my humble experiences so that you can be benefited from it. You can find out more from http://traderwork.com/
Always trade with your passion! Cheers!
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