Understanding the difference between a trader and an investor

We have often heard about these terms in our daily life and for most of them it is same, but in realty both terms are completely different.

Investors

Investors are people who are looking for long term investment say for 1 year to 10 years or more. They tend to invest in assets, commodities and they believe in a "buy and hold" policy. They make their decision after fundamental analysis and after considering risk and other factors.

Returns from investing depend on the tenure and credibility of shares but will give good returns depending on the long-term.

Traders

Traders are speculators and they trade for short term say from few minutes to a few days. Their approach is rather vague and instant. They take decisions based on news, reports, momentum or technical analysis. Traders are people who believe in "buy and sell" policy and they are worried about short-term fluctuations in the market.

Expecting returns from trading is uncertain.

So one should trade or invest?

There are more chances of making money in trading but it comes with risk and sound knowledge on stocks. Investing has its risk too.

However, trading sounds exciting and a means to earn quick money but only financial experts can make money out of it. For layman and others investing seems a better option.

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