INVESTORS VS. TRADER

Today, I'm going to talk about investing and trading stock and property market. I'm pretty sure many would know what is investing, but there are still many who doesn't know about trading. Some are confused between them.

Many STOCK TRADERS love to call themself as INVESTORS. Same goes to some PROPERTY TRADERS who thinks they are INVESTORS.

Let's look at the general term as defined by Cambridge:

TRADING : The activity of buying and selling goods and/or services.

INVESTING: To put money, effort, time, etc. into something to make a profit or get an advantage.


A TRADER is someone who makes money by buying and selling goods and/or services.

An INVESTOR is someone who puts money, effort and time into something to make profit.

The key different is the TIME.

Because of the TIME, the way a trader and an investor thinks are different. It's not just a mere keeping some investment for a year. It's beyond that. The TIME here refers to many years. Real long term.

When we think of the investors and traders, we will think of 2 very distinguished figure....

WARREN BUFFETT & GEORGE SOROS

Warren Buffett(left), George Soros(right)

Warren Buffett is an investor, while George Soros is a trader. I won't be writing to compare this 2 famous people. I'll be comparing a trader vs investors general mindset.

1. How they invest?
 INVESTORS - Any investment will be valued for potential long term growth.
 TRADERS - Growth? What growth? I want my money now.

2. Properties 
INVESTORS - They would keep it until their last day or maybe only sell it maybe after 10 years.
TRADERS - Flip it whenever possible. The longer you keep, the longer the expenses. Sell them for profit as soon as possible.

3. Active, Passive?
INVESTORS - More on PASSIVE Incomes.
TRADERS - ACTIVE Incomes. Even if you only spend 5 minutes a day.

4. Is it a business?
INVESTORS - They actually investing into a business. If it stock market, they are investing into the company, the business itself.
TRADERS - It's a trading business. Nuff'said.

5. Cutting losses
INVESTORS - They cut losses based on the future prospect of the investment. If, there is a clear bleak future, then only they'll quit it. They may use certain parameters as well to determine the future prospect.
TRADERS - They cut their losses based on a system. It could be trigger within the next minute, hour or days. It rarely would go on losses for a week or more.


So, are you an INVESTOR or a TRADER?
If you are not sure, you are likely into one of this category.

1. The Gambler
- A trader follows a system. A gambler have no system, or they think they have a system, but in reality it might not be.

2. Herd Follower
- They buy, I buy. They make money, I also want to make money., but I'm not sure why in the end I lose money. You just tend to follow general trends without really understanding how things work.

3. You are doing nothing
- Basically, you have not done anything yet, so you can't be be called an investor or a trader.

Do you have to choose between being an investor and a trader?
Of course not, you can be both. They give different type of income and different timeframe. There are many who actually does both. Do whichever makes you feel more comfortable.


The purpose of this post is to clarify the general public on the differences of being an investor and a trader, as there are many who love to use the word interchangeably

If you have further questions or need more clarification, just post your questions in the comment box.