--------------------

SUMMARY:

--------------------

Are You an Investor or Trader?

In my opinion, the majority of people I believe will be sitting in the investing camp and better off investing rather than actively trading short term.

Investing Disadvantages

1. One of the disadvantages I see is the slow feedback time which does not allow you to know if you made the right choice until months and in some cases years down the track

2. Secondly, long term capital committed means potential opportunity costs where funds can’t be committed elsewhere

3. Lastly, you may have heard of the buy and hold, leave it under the drawer stock which means that you could get too comfortable and hence never review any of your investments made in a timely manner.

Investing advantages

1. The first begin that you will incur much lower transaction costs where buy, sell and spread costs are minimal because of the inactivity of transactions

2. Secondly, due to longer term nature, there is inherently a lower risk as timing of entry and exit of the investment is not as vital when compared to active trading

3. Lastly, much lesser time commitments with perhaps just a simple weekly or even monthly review is adequate

Trading disadvantages

1. Firstly, trading definitely will incur much higher transaction costs, although this can be minimized simply through choosing the right online discount broker

2. Secondly, because you’re making decisions much more often, it can be psychologically taxing to your emotions, especially when you get things wrong which will happen often.

3. And lastly, while we mentioned that there is lesser time commitments required when you invest, trading is on the opposite end of the scale because you do need to be abreast of current market conditions and events and even individual stock news

Trading Advantages

1. Firstly, if you like learning, trading will speed up your learning progress as feedback of trades placed can be within a matter of days and weeks, not months and years like investing

2. Secondly, you will find an immense amount of flexibility to enter and exit trades according to rules and market conditions and even be totally in cash if the market dictates this

3. And finally the biggest advantage is that you will find it mentally rewarding as you find that opportunities are abundant and hence you get to pick and choose only the very best that fit your criteria and rules

So question is, where do you see yourself?

I always say to those who want to trade, to invest first if you have never invested in your life. This will give you the confidence to progress towards trading for a living.

I encourage everyone to look really hard at themselves because I simply believe that your success in the markets depends primarily on marrying your personally and deciding if you want to trade, invest, or both.

So I encourage you to take the action today and make that decision. You will thank yourself for taking the time to analyse what you are and then sticking with it.

Get Terry’s 10 step stock checklist and video lessons for free: http://www.thefreedomtrader.com