There are two types of people in this world: those who prefer to trade off-the-cuff and those who like to sit down for hours analyzing charts. In other words, there are traders and investors. For most people, trading is just a way to have fun when they have free time on their hands. However, some people devote all their time studying charts and trades to make a living out of it.
Who Are Traders?
Traders work for themselves without being an employee of any company or organization. They rely on their ability to forecast a particular currency’s direction – whether it will increase or decrease – and use this information to determine trade moves.
Professional traders are always on the lookout for opportunities to make money no matter where they are as long as they have access to charts displaying values of various currencies. Some may even forego sleep or meals so that they can have their total concentration on trades. Successful traders usually hold part-time jobs while devoting some portion of their time towards studying charts. Still, those who want a career in trading should consider going into the profession full-time.
What Are Investors?
Investors, on the other hand, would rather have someone else think of them. They are more comfortable letting someone else take care of all the thinking so that they can reap the benefits – whether it is in the form of interest, dividends, or appreciation.
Investors invest their money through specialists who manage them based on specific strategies or rules. It is important to note that investors don’t have to be concerned about the actual buying and selling of stocks since professional stockbrokers are handling these transactions.
How Do Traders Make Money?
Traders profit from price discrepancies between two different markets. It may sound unclear, but basically, this means that you buy a currency at one place then sell it at another place for a higher price. The difference between what was paid and what was earned is your reward. If you can do this repeatedly, your money will multiply.
Different traders have different ways to earn from the market. Some would enter into a long or short trade then wait for it to expire, while others rely on technical analysis that tells them where the market is headed next.
How Do Investors Make Money?
Investors depend on dividends, interest rates, and gains due to appreciation of their holdings to increase their wealth. Dividends are payments made by companies to investors who own shares in these companies. Interest is the return received based on money lent to other parties. Appreciation occurs when an investible asset increases in value over time – similar to how stocks appreciate over time. Common stocks usually offer higher returns than fixed-income assets.
Investors frequently invest in diversified portfolios that are likely to do well no matter the economy. For investors, the best time to buy stocks would be when there is market panic, and everyone else is selling – this way; they can secure good deals for their investments.
How Can I Start Trading Or Investing?
You don’t need any special qualifications or training to start trading or investing, so anybody can do it given access to charts and money. However, the more training you have, the better because you will probably increase your chances of success. Several educational institutions offer courses related to forex market trading and investment, so choose one that suits your learning style.
Given that trading and investing are time-consuming, you should be prepared to spend at least 4 hours each day on your trades or investments, not including weekends. Trades usually hold part-time jobs while devoting some portion of their time towards studying charts, but those who want a career in trading or investing should consider going into the profession full-time.