Investor or Trader- Who are you?

Investing vs. Trading

Investors and traders are two terms used to describe participants in the equities market. The names are frequently used interchangeably. However, there are substantial differences between these two terms.

Investing and trading are two distinct ways to make money in the financial markets. Though they may appear to be the same process components to someone with little knowledge in the financial market, the two are far from the same.

Before jumping into the main differences, let's first start with the meaning of these two terms.

Investing

Investing has typically been associated with purchasing stocks or other financial instruments that are assumed to provide profits over a lengthy period. They are frequently kept for numerous years, much like family silver.

As a result, investors must select stocks or bonds from companies that are likely to grow in the long run. Thus, investing entails conducting an extensive fundamental study on the potential investment objective, whether a company or a long-term bond.

An investor's goal is to build a diverse stocks and bonds portfolio that provides returns through capital appreciation and dividends or interest income. It allows them to achieve financial security.

Investor

An investor or corporation is one who commits capital to an asset in the hopes of receiving a financial return in the future.

Types of Investors

1. Pre- Investors

Individuals who have begun to consider investing are considered pre-investors. However, they haven't taken any step to put money into an asset.

2. Passive Investors

Passive investors don't have time to spend on their assets. The passive method works effectively in this situation. A simple way to maximize the profits on your available capital while taking on more risk than you are satisfied with is the hallmark of a passive investment.

3. Active Investor

 Active investors spend time studying the market and learning how to discover investing possibilities.

Trading

Stocks, commodities, currencies, bonds, and other financial instruments can be bought and sold for a shorter period of time is what trading is all about. It is mainly done to profit from short-term price swings in these securities. As a result, traders effectively benefit from volatility.

It is known as technical analysis. It entails more regular stock or other financial instrument purchases and sales.

In simple words, it's an activity of buying and selling shares, currencies, and many more on financial markets.

Types of traders              

1. The Day Trader: These traders look for multiple trades. They try to gain from the small market movement. These traders aim for 10 to 20 positions a day and are highly opportunistic.

2. Swing Trader: These traders focus on price actions and trends. They look for definitive trends and reversal prices. They also highlight particular entry and exit points.

3. Technical traders: Technical traders make use of technical analysis to make investment decision. Based on the statistics, these traders determine trends in the security prices and accordingly take a buy or sell decision.

4. Fundamental trader: These traders focus on company-specific events and accordingly decide whether to buy or sell any particular stock.

5. Long-term trader: Long-term trading, also known as position trading, refers to the trading style in which the trader will hold the position for a longer period. Most of the long-term trading depends on fundamental analysis as these traders are primarily concerned with the future outlook of the market in which they are trading.  

Investing vs Trading

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

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