What are traders and investors

 Trading VS. Invest

If you invest in the stock market, your goal may be to profit from a long-term investment. But traders approach things differently. Traders prefer short-term investments and aim to sell stocks to take advantage of price fluctuations.

The following paragraphs highlight the differences between traders and investors:

1. Investment Period: A trader makes short-term investments, holding stocks for months, weeks or days. Intraday traders actually buy and sell stocks within a single trading day. However, investors tend to make long-term investments. They hold the stock for more than a year, even several years, to generate capital gains.

2. Risk appetite: Traders face short-term stock price fluctuations. This helps traders to have a high tolerance for risk. Investors are more risk averse. But when you invest in the stock market over the long term, the daily market cycles may not have much impact.

3. Approach: Traders benefit from changes in stock prices. They buy stocks when prices are low and sell when prices go up. Thus, traders regularly monitor the market to identify the best trading opportunities. However, investors in it in the long term. When you invest in the stock market for a longer period of time, the gains come largely from the power of interest rate formation.

4. Psychology: Investors are patient enough to sit down and hold on to long-term investments. Often, investors also have a low risk appetite. Meanwhile, traders welcome the risk, do extensive research and adhere to the prescribed trading plan. Traders also think and make adjustments to exchange rates when the market moves against them.

5. Decision Making Process: Investors can take a long time before deciding to invest in stocks. They study the fundamentals of different companies, evaluate their management practices, growth potential, and other factors. While traders look at the basics, they also perform technical analysis using price charts and other tools. They make decisions faster, but usually they already have a strategy to guide them.

6. Demand for Capital: Traders look for short-term investment opportunities that offer profits through price movements. But in order to make significant profits, they need to trade a large number of stocks. They can do this by using margin funds borrowed from the broker. Investors, in turn, have to manage the funds independently. They can also be locked in investments for longer periods of time, while traders can quickly liquidate positions as needed.