Are you an investor or a trader ?

When considering entering the stock market, it is crucial to understand your own approach. You must ask yourself if you identify more as an "investor" or a "trader." Investing and trading are two distinct methods of seeking financial market gains. While both traders and investors participate in the same market, they employ completely different strategies.

An investor conducts thorough fundamental analysis, evaluating factors such as company growth, future prospects, industry performance, management efficiency, and corporate governance. They assess how well the company adheres to government regulations. After analyzing all aspects of the company, an investor strategically allocates their funds, intending to hold the stock for a certain number of years. They view the company as if it were their own and allow time for the business to grow and strengthen. If the company underperforms within the given time frame, the investor reviews their portfolio and makes necessary adjustments.

On the other hand, a trader typically aims to profit from capital gains. While investors seek annual returns of 15-20%, traders seek similar returns within a shorter time frame. Traders generate profits by buying stocks at low prices and selling them at high prices. They often employ technical analysis tools to identify highly profitable trading opportunities. Traders do not form emotional attachments to companies and sell off stocks once they achieve their desired results. Price patterns, market sentiment, supply, and demand are some of the factors that concern stock traders. Ultimately, traders provide liquidity for investors and consistently take the opposite side of their trades.

Both traders and investors play essential roles in the functioning of the market. Traders provide liquidity for investors, while investors establish the foundation upon which traders can buy and sell. However, it is crucial for individuals to clearly determine whether they align more with being a trader or an investor before entering the market.