Should I be an investor or a trader? Which one is better?
That question may disturb your thoughts several times. Many people issued their opinions about these issues. Some of them think that investment is much better than trading, but the others do not agree with that statement.
Well, let’s start our discussion about the differences between an investor and a trader!
Investors usually play passively. They are looking for a return in the future, low stress, playing long term, and even not affected by the short term. They usually use the analysis which consists of fundamentals, business analysis, and financial reports. Additionally, most investors buy shares to be stored for a very long time.
One of the success formulas of long-term investment, especially in mutual funds, is to use the dollar-cost averaging method. It means that no matter the market or the exchange is up or down, they will invest regularly every month. Thus, what they get is the average value of their long-term investment.
For example, you want to invest $10. After 20 years, you can immediately become a billionaire without having to work hard.
And, how about traders?
A trader will usually play actively looking for fast returns in the present. It tends to be more stressful, short-term trading and greatly influenced by prices. The traders usually use more technical analysis to determine when the right time to buy and sell the currencies. The time horizon of trading for stock trading usually takes place in the short term. It can be in a matter of days, hours, even minutes. It can happen because of fluctuations in share prices that are very high. The traders cannot only wait for the profits, but they need to take action to get it.
According to Investopedia, the investors generally seek larger returns over an extended period through buying and holding. Conversly, the traders take advantage of both rising and falling markets to enter and exit positions over a shorter timeframe, taking smaller, more frequent profits.
What about you? Do you want to be an investor or a trader? Try to think it carefully, fellas!
Read more: Year-End Trading Review, Is it Important?
