Is it better to be a good trader or a good investor? All yields being equal.?

Answer 1

There are a lot of good answers here, and I really liked DreDude's answer. He is correct. You can not say one is better than the other without looking at the individual. That's like asking a group of guys, which is better a blonde or a brunette? That depends on the tastes of the individual males. Some will say blonde, others will say brunette, while others will say a redhead, or women of a totally different race, like Oriental, Indian, Hispanic or Middle Eastern.

The question you should be asking yourself is which one is better from my trading style and personality?

Also, what the other posters have missed and the majority of people are mistaken about is the true definitions of trader & investor.

Most people will define a trader as someone short term and and investor as long term. That is partially true, but here is the real definition of investor and trader:

Investor - a person that BUYS an asset with the anticipation of it increasing in value so they can sell it for a profit.

Trader - a person that BUYS OR SELLS an asset with the anticipation of selling or buying back for a profit. A trader HAS NO MARKET BIAS!!!

In other words, an investor is always looking for the market to RISE in value. A trader doesn't care whether the market is rising or falling, he will go long if rising and short if falling.

If an investor were purely defined as a long term investor, why then do they only BUY? If they are long term, then they would be selling during secular bear markets.

Most people only see the length of the trade as the definition, but a truer definition is "what is their market bias"? If a person is only buying and selling for a profit, they are an investor REGARDLESS of the length the position is held or how often they are in and out of positions. If they go long during a bull phase and short during a bear phase, then they are a trader REGARDLESS of the length of the position or how often they are in and out of positions.

Now do you see why it is more pertinent to define an individuals trading style with whether it is better to be an investor or trader?

Answer 2

It is better to be a good investor if all yields are equal, because being a trader is more time consuming.

Also, keep in mind that traders will incur higher commission costs due to high volume of trades and all gains will be paid out as short term capital gains. An investor may save on taxes by holding a stock long term (1+ years)

Answer 3

What's "better" depends on the person and many factors. Some people can't handle the stress of trading, equivalent to that of an air-traffic controller.

Being a trader requires a firm committment to continuous study and learning and implementing new ideas. It is not a job that you work at for money; you will tire easily, lose interest and money, and quit. It requires a passion for the process of trading. It also requires a large monetary investment into high-tech hardware and software trading platforms and intraday data services.

As an investor, you can look at your investments after your day job, end-of-day, or end-of-week on the weekend. This is not a big committment in time or money or equipment, and leaves lots of time left over for study and analysis and your family. This is the "better" solution for most people.

Every successful trader I've ever known or read about, they trade because they couldn't possibly do anything else. They are drawn to it, driven by it, live it, sleep with it, and eat their meals in front of it. A full-time trader is a special breed, cut out for this purpose. Like a musician or a painter, we are not better than anyone else, just different. Personally, what I lack in intelligence, I make up for with hard work and long hours.

Without passion for the work and the process, it is nearly impossible to master. The 80% or 90% of the people that blow out of trading, were probably never meant to be traders. They were attracted to it by the money, and since they were successful at other things, they presumed success at trading also. Doctors and lawyers are the worst traders out there, because they are used to being in control. Nobody controls the markets, no matter how hard they mistakenly try. There are many psychological hurdles to overcome in trading. The books say that trading is about 50% psychological; I think it is more. You will have to check your ego at the door, wrestle with fear, and harness and strangle hope and worry.

There is a lot to be learned from trading by investors. Many of these same methods and processes can be applied to longer-term investing, especially the psycholoical factors and risk strategies and money management and entry strategies. But before you go risking your life's savings, try to determine first if you're really cut out for short-term trading.

Answer 4

You have receive some real good answers but one area was not addressed. Taxes. Traders have a much greater tax bill than investors if they are successful. They also have much higher expenses. The taxes and expenses are continually erroding their profits. Investors on the other hand, if they have made sound investments, avoid the taxes and expenses that plague traders. And their yields will be greater in the long run.

Answer 5

There really isn't that much difference on average. It's something like 15% return for traders and 12-13% for investors on average. It's a lot more work being a trader. If you put your money in a mutual fund, you are a trader unless it's an ETF.

Answer 6

a good investor see the long range, from the long range ,you could see the short term.
a good trader maybe see the good short term, but not necessarily see the good long term that may blindsite them.

One good story about a good investor. Warren Buffet at 1999, he moved all of his money to cash, he was laughed and criticized for being not a believer in the tech boom. Look who has the last laugh? two year later at 2001, you already know what happen to the tech stock? and his fortune rised to 44 billions, where are all the good trader?

Answer 7

perhaps you can try forex. which is also excellent way for you to invest.

The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

try forex from here:

http://www.bernanke.cn/easy-forex/

Good Luck && Wish you make a fortune!

Answer 8

in the long run, better to be a good investor

Answer 9

I think in my opinion its best if you can master both of them

Answer 10

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