Should You Invest Or Trade
The trading industry is a confusing business, especially if you are thinking whether you are going to trade or invest. Many people would think that investing and trading in the stock market are just same, and these people are those investors that wonder why they don’t make much money in the stock market. These kinds of people usually invest based on hot tips, gut feeling, and trying to chase the market right after it has already gone up.
The main difference between the two “trading and investing” would be the investor’s investment strategy. This may appear to be a subtle difference, but it is a massive difference that can create more red ink in an investor’s portfolio than almost anything else. If they don’t understand this difference of the investment and trading then they are doomed to fail with their investment strategy and to achieve minimal stock market returns.
In investing, an investor buys a stock that is based on solid fundamentals, and holds it for the long run. Generally speaking, that means for one year or more. They don’t usually pay much attention to the daily fluctuations within the market, or whether their stock goes up or down for few percentage points. Having an investing attitude is like having ownership in your own personal company. You will take a long term viewpoint with your investment style. If a company’s financials are shaky, or perhaps the company’s growth is slowing or even expected to slow, this is probably not be the best business to invest in.
A trading attitude is a different story. If someone trades a stock, they are in it for a short period of time. Generally an investment will turn in a very short period of time. This can be from one day to six months. The trader isn’t looking for the next Microsoft; instead they are simply looking for a stock that can move up or down a few percentage points quickly. Traders can make money on in an up or down market circle and they will often use both technical and fundamental analysis in their stock picking.
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