Online Trading: Should You Be a Trader or an Investor?
With online trading, you can easily buy or sell thousands of shares. Orders are routed to a specific stock exchange through a Broker's online system and are executed within a few seconds, usually without any manual intervention.
Online investment is different from day trading. In day trading, an individual buys and sells shares in a very short period of time, in most cases, on the same day, in order to benefit from the marginal movement of the securities.
If you are a new investor, you should understand investment principles, investment objectives and risk tolerance before entering online trading. As an online trader, you may entice you to trade or participate in an excessive transaction, which can lead to increased transaction costs, tax-related conditions, and huge losses.
Despite some limitations, online trading improves the performance of stocks and other investment instruments such as bonds, mutual funds and currencies Trading patterns, basically, in the rapidly changing capital markets. So, you should be a trader or an investor?
As a trader
Usually, short-term traders, including day traders, also known as market timers, can not derive profits from their investments because Their investment is not based on the company's fundamentals. Short-term traders sit in front of their computer terminals throughout the day to see the movement of particular stocks. Day traders usually buy stocks to borrow money for quick profit, however, they bear a very high risk of loss. If you are a day trader, you should take the risk that you can bear the loss of money. Short-term traders will not "invest" in general as they see the momentum of a particular stock on the chart. They do not study or study fundamentals.
As an investor
Investors usually generally study the fundamentals of a particular stock before investing in a company, such as revenue growth, earnings growth, cash flow, Debt and yield, etc., 39 shares. Investors also take stock valuations very seriously. Long-term investors take the lowest risk when looking at the full range of securities-related risk / return. They have achieved their long-term goals for investment. Long-term investors typically research a particular stock or obtain investment advice from an investment banker to maximize the benefits and limited risk. They also studied the history of returns on specific stocks.
Investors also follow investment strategies such as top-down or bottom-up investments, Find the department that will produce either above average or advanced results. In a top-down investor, an investor investigates the prospects of a country's economy before deciding on specific sectors before investing. In a bottom-up approach, investors are purely opportunistic, and are studying the various sectors of a particular economy and investing as many sectors as possible without any restrictions.
While you may find the value of your investment declining in the short term, investing in long-term prospects will be more likely to bring better returns.