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Are You An Investor Or A Trader?

stock market
photo by rednuht

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Often times people say that they invest in the stock market. Many times I’ve heard people say that they’re a trader of stocks. What’s the difference? It easy to know the answer if you break down the meaning of both of them.
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An Investor is someone who looks toward the future. A person who is looking at the positive outcome of something (ie, stocks, companies, properties). Investors don’t go into anything that they don’t have the full picture of. You will never hear an investor say “I’m hoping for a 10 point jump tomorrow in XYZ”. They don’t look at their portfolio on a daily basis and think of what stock they’ll buy today or sell tomorrow. When an investor gets into an investment, they’re in it for the long haul. The decision wasn’t made hastily and on a whim. He or she has looked over all the necessary paperwork to see if this is a sound and profitable venture. An investor will also look into what the worse case scenario could be and prepares his investment accordingly.
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A trader on the other hand is someone who will ride a trend for a short period of time. He or she is not in it for any long length of time. they see an instant opportunity and make a quick a rapid decision. Yes, they may know the overview of the stock and have an idea on the short term direction of it, but that’s their goal, short term and now. A trader is also known as a day trader for a reason, they will get in and out of a stock with in the same trading day. A trader is looking out for themselves, unlike an investor that may be looking into their future generations as well as their own. A trader doesn’t really care about the future of the company, they won’t be there that long to care.
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It may sound like I’m not too keen on day traders, but I do respect what they do and I’ve been known to day trade myself. I’ve made some good money that way, but I noticed that the more I got into doing it, the less I enjoyed my weekdays. I found myself getting lost in the markets trying to find the next “big hit”. I realized that I wasn’t happy during the trading hours for whatever reason.
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P.S. Want to learn more about the stock market? take a free two week trail with Jim Cramer from TheStreet.com

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I love the stock market and look forward to it everyday, I don’t let myself get lost in it, for if I do, I’d lose myself as well.

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