Know Yourself - Will You Be A Trader or Investor?

Most of the People who enter The World of Investing in Stock Market gets confused when it comes to choose their path to Invest in Stock Market, So today in this post I will discuss about both Trader and Investor which will help you to evaluate which path you should choose for yourself - Will you be a Trader or Investor?

In this post I won't recommend that you should become Trader or Investor, what I will do is just only 'evaluate', you have to examine yourself and at last you have to choose your path and work on it seriously. 

So diverting you back to our topic, Let's discuss about Who Is Trader? and Who Is Investor?

Who Is Trader?

Trader is that person who is actively engaged in buying and selling stocks and commodities to earn money daily on their Invested capital, Trader never cares about fundamentals (Yes, some do but very little) most of the trader works using technical charts and then decide whether to BUY or SHORT SELL the underlying security. 

There are Two Types of Traders

1. Professional Trader
2. UnProfessional Trader

Professional Trader is that type of Trader who studies the underlying security (In which he is actively engaged) deeply and studies technical charts, patterns regularly and after that makes a strategy, In the end he decides to BUY or SELL then he writes where to book PROFIT and where to stop the LOSS. Professional Trader is active mind and quick decision maker can also handles the extreme pressure, stress and emotions while he is trading.

Unprofessional Trader is that type of Trade who relies on different recommendations from different sources and then engage himself on decisions of those sources, he never knows where to book profit and where to stop the loss he is just engaged in trading and believes in his luck.

So, if you want to be a Trader choice is yours which type of trader you want to be!

Who Is Investor?

Investor is that person who just invests his money in stocks and holds it for different time horizons to earn some good returns on his invested capital, Investors studies both about fundamentals and technical charts to know when to enter and when to exit that stock.

There are Three Types of Investors

1. Short Term Investor
2. Long Term Investor
3. Value Investor

Short Term Investor is most likely a trader he can either be professional short term investor or unprofessional short term investor, This type of investor mostly buy stocks for 2-3 days horizon to earn great returns on his invested capital.

Long Term Investor is that type of Investor those rely on different sources and stock recommendations to BUY stocks for 1-3 Years and expects to earn inflation beating returns on their investments, actually such investors just want to invest in stocks but they don't know how and where to invest in stocks.

Value Investor is that type investor who not just invests his capital in stocks in fact he value the businesses and then finds out its actual value after that he examines the stock price of those businesses if the stocks are trading in his valued prices then he invests in those stocks for very long time horizon because he also believes in the quality of business as well as the compounding factor attached to quality businesses so he don't exits from such businesses after short term gains in fact he enjoys long term returns on those stocks. 

So above was the brief description of Trader, Investor and their types so read them twice until you understand who you are and who you wan't to be. To make your decision more clear and solid I have designed an evaluation chart which I will share with you in my next post, In that post I will explain you how to use that chart and What Will You be - Trader or Investor!

Read: Trader or Investor - Evaluation Chart by Gurpreet Saluja

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Also Read: Fast or Slow? How to Work in Stock Market?