A trader or an Investor? This has been a very redundant question that was always asked by many people for the longest time. In reality, many people in the stock market today don’t even know how to identify themselves as a market participant. So most often than not, investors eventually became traders, bet on stocks to go higher and traders became instant investors when they’re bull trapped (ipit) on a losing speculative stocks.
Revisit your goals
If your goal is not crystal-clear then that is poor preparation, you have a high probability to fail. Even traders have very clear-cut and specific goals. They followed a very strict discipline! We tend to forget the reason why we are here in the stock market the first place. Many people are easily enticed in trading because of the short-term reward without evaluating much their risk appetite and their available time to spend in the market.
Trading is not for everyone, Chart is.
There are many things you need to prepare before going into trading and most of the roads are not easy. Believe me I’ve been there up until now! You need to invest your energy, analytical skills, your valuable time to monitor the market and to analyze the chart.
If you think that trading is just only listening to stocks picks, you’re definitely wrong. Trading is executing buy and sell through the price patterns and it may take time before you’ll get the hang of it. It could also take years to be consistently profitable.
If you can’t risk it, then it is not for you. Learn to use a chart and apply it as a long-term investor. You don’t need to be converted to become a trader but you can use technical analysis to improve your buying entry and to exit the stock once it is showing warning signs.
Trading and Investing leads to one goal
There’s no better than the other, whether you’re using fundamental analysis or technical analysis. If you think that you don’t like investing for the long-term since it is boring and is not worth your time, then just think of Warren Buffet: one of the richest man in the world. He is one of the greatest investors, buying companies for the long-term and holding it as they grow. I’ve known people who are long-term investors that are now very successful.
Fundamental Analysis vs. Technical Analysis
In the stock market, there are two school of thoughts: Fundamental and Technical Analysis. Fundamental is sizing up the company while Technical is analyzing actual stocks through price action. They’re both very useful, some fund managers are even combining it and got good results.
The importance is you have to use at least one of them for you to be able to be successful and you can do it the right way, not just guessing when it will go up.
My Personal Journey:
I’ve been investing for many years now and my goal is really for my retirement after 20 years. I’m always a fan of delayed-gratification. I’ve been always saving and investing since day one. Then a few years ago, it came to my mind to study Technical Analysis because I got very interested to it.
For me, it is much simpler than reading financials of the companies and the actual information of the price are all available and can be seen in the chart. Once I was ready to go, I did open a separate trading account. My goal for trading is to maximize short-term profits to reinvest it. It was doing good since then.