Are you a trader or investor | stockbee


Are you a trader or investor

These are completely two different approaches.

Traders use several tactics to reduce risk and increase returns.

Investors need different set of skills.

Traders need different set of skills.

Traders have spent considerable time developing an edge.

Investors in most cases have very little edge or have made any attempt at developing edge.

As Steve Cohen said in one of the interviews "You have to know what you are, and not try to be what you're not. If you are a day trader, daytrade. If you are an investor, then be an investor.'

Role conflict is a big issue for those who do not clearly understand difference between trading and investing.

They enter position as traders and hold it like investor, which leads to conflict and losses.

They do not exit like traders, they hold it like investors and see quick profit disappear.

Lot of time the issue for investor is lack of skills, knowledge and misconception.

many of them have disdain for active trading, they do not understand why active traders do what they do and how they do it.

They have misconception like active trading increases commission costs. Or it is bad. Or most traders fail or do not beat market. Besides that they do not have right tools, brokers, scanning software and do not understand the need for it.

Obviously trading is not for everyone. If everyone becomes trader there will be no profit opportunity to exploit. Most traders exploit the behavior of individual investor to profit from it.

Think about this and clarify your own role, are you a investor or a trader.

If you chose to be investor then build expertise in becoming good investor by studying commonly used techniques used by investors. Don't rely on half truths and misconceptions. Educate yourself and then devise your strategy.

If you chose to be trader then build expertise in trading. Understand why traders do what they do. What kind of opportunities traders have been exploiting for hundreds of years ( tactics have changed but basic ideas remain same). What do swing traders do. What do day traders do. What do position traders do.

If you decide to be trader understand it requires skills and effort to develop and edge. It is not going to happen instantly and requires time and effort commitment. You can shorten your time frame by basing your trading on someones system, but at some stage you need to develop your own edge based on market tendencies.

I am a  active trader and it suits my tendencies, I became a trader because the returns I was making as investor were not attractive.

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