The Difference Between Share Traders and Investors

Trading shares and Investing in shares are two different things and should never be confused, even though they are used interchangeable in the world of shares. One notable and perhaps the most important is the time each person holds on to a stock.

While the investor is more interested in the appreciation of a company’s stocks over relatively long periods of time. He is not very concerned with the changes in daily market as he knows that these will be overridden as time passes by. They carefully rely on analysis of a company over a long term prospective and follow a ‘buy and hold’ strategy on most stocks.

Whereas the trader is more concerned about the rising/dipping of share prices on a daily basis or even on a hourly prices. These traders tend to make money on the short term fluctuations of the market. They make use of the market outlook, industry news and general rumours to make capital gains on their money.

Share traders will follow prices and look for technical things such as support and resistance, trend lines and candlestick patterns to guide them to profit. However, this type of trading comes with many added risks. Where as a long term investor will ride out a few ups and downs, a short term trader may want to be out of an investment if it doesn’t behave how they thought it would. Maybe traders are prone to picking tops and bottoms. While this can be profitable, it can also expand losses very quickly if you do not use solid money management.

In today’s market scenario, investors are few and traders are many since the market is unpredictable as the weatherman. 🙂 Also, as a share watcher, my analysis is to be a investor, but hold on to a stock only if you are sure about its appreciation over time. Otherwise, book your profits/losses and enter the market at a lower price point.