Many people use the term trader interchangeably with term investor without realising the difference and impact it may have. Till things go right, its fine, but when problems creep in, difference becomes obvious.
Market has two type of people, one who buy stocks with intention to sell it at later stage without much interest in company policies and related, other than it being right company with good or healthy market standing. While other group of people are those who thoroughly study company's profile, policies and if they find it potentially beneficial, they associate with the company. First group of people are called TRADERS, while the latter one are INVESTORS.
Traders usually hold on to stock till its throwing in profits and may be for short term only. if it starts showing losses, they sell the stock to get on to another.
Investors on other hand have thorough understanding of policies and working of company, so they don't sell stocks at slight loss, unless they re-assess and find situation to be worthy of selling the stake.
Problem may arise when a trader tries to become investor at time of loss or slight fall in values, or viceversa when loss is marginal.
Trader trying to become an investor may end up loosing much more, unless he has studies company in detail and knows when to move away. Investor if tries to become trader and sells stake at just loss of say 5%, he may well be ruining his future, unless his analysis was right.
So, there is a difference and its important to understand what you are becoming or are at present. Never try becomnig both with same stock.
What is the difference
What is the difference between investing and trading? You ask different people and you will get different opinions. And if I ask you if you are a “trader” or an “investor”-you might promptly say that I am “long term” investor without even understanding what it means.I will just give you my opinion on this.
An investor is usually a “buy and hold” types. He lives in the realm of “hope”.He buys a security and hopes that the price will go up.He does his “fundamental analysis” and falls in “love” with his/her investment. Even when the price of security is going down,he doesn’t believe in selling it because he is convinced about his analysis. He doesn’t believe in timing the market but a strong believer in “valuation” and “growth” of companies whose securities he owns.His edge lies in his “analysis”.If his analysis turns out to be true, he makes money in the “long term”.Otherwise,he ends up losing badly.Check Infosys Fundamental view post to see how and where a “fundamental guy” can go wrong.
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kelvin
Drug Treatment
I tend to agree with grcs
I tend to agree with grcs too. I am not sure what you mean by:
'INVESTOR INVESTS HIS MONEY AS THE TRADER SHOWS THE PATH TO THE INVESTOR TRADER IS INCOMPLETE WITHOUT INVESTOR'
Can you explain?
I have to agree with gscs, a
I have to agree with gscs, a trader is someone who is into stocks solely for making money and can flip their investments at anytime, an investor is someone who is in it for the long term.
DIFFERENCE
TRADER IS LIKE THE PERSON WHO DOES ALL THE BIG JOBS OF SALING AND PURCHASING THE THINGS REQUIRED
HE DOES ALL THE IMP WORK
HE CONNECTS THE INVESTOR WITH THE MARKET
INVESTOR INVESTS HIS MONEY AS THE TRADER SHOWS THE PATH TO THE INVESTOR
TRADER IS INCOMPLETE WITHOUT INVESTOR
Holding period
A trader holds securities for a short period of time is anywhere from one minute to one year. For an investor, they holds securities for a long time.
A long holding period is anywhere from six months to forever.
Both of them need technical analysis as well.
Thats great deal of
Thats great deal of information. I always thought both terms to be same and used them interchangeably.
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