After reading into many forums and talking to professionals, the one question which was come across more than most is ‘what is the difference between an investor and a trader?’ There is so much speculation about what a trader is and what an investor is, the choice was made to put it in one simple article which will help you understand the difference. The actual answer to this question is simply, nothing.
Look at it Like This
The simple way to look at it is like this. Whether you see yourself as an investor or a trader the main aim is to make money. For example Adidas buys time on TV for advertising in the hope to gain clients and therefore make money. They are not trading but investing money to gain more. If you buy and sell items on Ebay then you are hoping to gain a reward. Street vendors, store vendors, traders in the currency market and even large companies put themselves out on a ‘risk’ in the hope to gain a ‘reward’. Whether you are buying something and looking for a return or you are trading something for a bigger reward the outcome and the main goal will always be the same. The only one suitable difference is that traders class themselves as short terms investors and investors as long-term.
The class of people who class themselves as investors tend to risk a larger capital than those who class themselves as traders. There are many investors around the world who invest thousands every day in the hope of gaining profits. A lot of people don’t meet their financial goals because of the fear they have. The fear that they will lose money rather than make it. Both investors and traders sometimes can’t tell the difference between opportunity and risk. Those who put in the time and effort to learn about trading and money management will see bigger rewards than those who don’t.
Who Am I?
Don’t get confused about the two terms because they lead to the same possible outcome. Whether you think of yourself as a trader or an investor you are hoping to gain the same thing as the trader or investor next to you. You may trade in currencies or invest in stocks with CMC Markets – either way you are hoping to make profits. It is the same with business owners, store owners, online traders and literally anyone who has something to make a small or large profit. Maybe you bought a new item of clothing in the sale and then sold it to a friend at the retail price, this makes you both an investor and a trader. You took something, invested in it and then traded by gaining a profit.
The one thing that a lot of people get confused over is they think trading is simple and can be learnt about overnight. They think that investing requires more time and effort. That is wrong because with whatever variety or trading or investing you choose it will take effort, patience, money and time to gain the skills needed to be successful.
If you hoping that by becoming a trader it will easier you are also wrong. Whether you are investing long term in property or stocks or day trading with currencies you still need to know what you are doing, follow the markets, keep up with the reports and gain a method and strategy which works for you. Overall, trading online and offline requires time. You need to put in time for research, for trading, for learning and for practicing.
So, the next time someone asks you, are you a trader or an investor answer neither. You are a person who invests and trades in various markets in the hope to gain profits. This is a job which requires effort and your goal is one – to meet financial aims. The simple answer to the one question which is asked all the time is there is no difference between an investor and a trader. You are you and you are completing actions which make you a trader and an investor in order to make money and meet your financial goals.