ARE YOU AN INVESTOR OR A TRADER? WHAT IS THE DIFFERENCE?
A small note highlighting the difference between a trader and an investor in stocks
Investor? Trader? Confused? We heard you!
When you buy a house with the intention of living in it, you do not aim to sell it immediately or in the near future. The fluctuation in the price does not matter to you. If at all you sell it, it is usually after a gap of 5-10 years when you build a larger, better house. Hence the house is an investment not meant for trading.
Similarly if you buy stocks and intend to hold them for the next 5 years, without getting bothered by short-term fluctuations, you are an investor in the stock market! If your primary intention of buying stocks is to sell them and make money on the price fluctuations, then you are a trader. Being a trader is riskier, but also gives more returns. Of course, subject to the conditions that you analyse, you are disciplined, and you invest time learning about the trends!