Difference Between Investor And Trader
In today’s blog, we will talk about a topic that confuses new people a lot, that is, what is the difference between a trader and an investor.
1. Investor
So first of all let’s talk about investors. Who is an investor in the stock market?
An investor is a person who invests money in the company’s shares for a long time. An investor is not affected by the daily market fluctuations because he invests his money for 5-10 or 20 years.
An investor is always a shareholder of the company. For example, if you buy shares of Tata Motors for a long term, you will be a shareholder of Tata Motors. The more shares you have in the company, the higher will be your stake.
Difference Between Investor And Trader
Now, if you are a shareholder of the company, it means that if the company makes a profit, you will also make a profit and if the company makes a loss, you will also suffer a loss and this is exactly what happens.
But if you also want to become an investor, then you always have to think about the long term, you should not be afraid of small fluctuations in the market, you always have to look at the bigger picture, because the long term profit that is made from investment can never be made from trading. Difference Between Investor And Trader
2. Trader
Now let’s talk about who is a trader. The mindset of a trader is completely different from that of an investor, because the trader tries to make money from the daily fluctuations in the market. The trader buys shares and sells them after some time. This whole process takes a few hours, days or weeks.
Like if you do intraday trading then you have only one day’s time, you have to buy and sell shares within a single day,
and if you do swing trading then you have a few days or weeks’ time, you can hold your shares for a few days to weeks.
Everything happens so fast in trading that you have to learn a lot of things like technicalities, chart patterns and price action.
Difference Between Investor And Trader
So let’s talk about the difference between an investor and a trader.
1. Time
So the first difference is of time. An investor always buys shares for a long time and has to be patient, but a trader always thinks about making profit in a short time.
2. Risk
The second difference is risk taking. An investor always prefers to take less risk as he trusts the fundamentals of the company and lets the value of the stock grow over time. But a trader is keen to make quick profits and thus has to take more risk.
3. Knowledge
The third difference is the type of knowledge required for an investor. Fundamental analysis is important for example, what is the business model of the company, how is the balance sheet and how much profit the company has made in the last few years. On the other hand, a trader focuses more on technical analysis, such as chart patterns, candlestick patterns and support resistance.
Difference Between Investor And Trader
Now the question arises which of these two is right for you? The answer to this question depends on your interest, time and risk taking capacity. If you can invest your money for a long time and have patience then investment can be a good option for you, but if you are ready to take more risk and can keep an eye on the market all the time then you can do trading.
Difference Between Investor And Trader