Stock trading is better than investing because trading is more flexible than investing. Traders don’t need to wait for months after months or even years after years to take profit.
Stock market is very risky and sensitive. Unrealized gain never counts as a gain unless you sell stock. Stock traders can reduce loss by getting out of trade with little loss.
On the other hand, investors have to wait for years after years to get maximum return. As stock market is more volatile, you can’t actually predict what will happen in the following year.
Reasons of stock trading better than investing
Flexibility in stock trading
Traders are very flexible in trading and they can easily take buy or selling decision according to market movement.
On the contrary, investors have little ideas about market movement and they can’t take immediate action according to market movement.
Stress free life in stock trading
Many day traders prefer to close trades within trading hours. They can go to bed without any pressure. They may lose money in trading but they don’t put trade for next day.
Always recall that future is uncertain. But, investors always expect sustainable capital gain and dividend every year. Any unpredictable event may destroy their hard-earned money.
Minimum loss in stock trading
An experienced trader always like to follow stop loss rule strictly. They always try to cut short of their loss. In this way, they must safeguard their trading capital.
Naturally, investors always like to wait. Investors are reluctant to follow stop loss rule. A downtrend stock may reverse its movement but it takes time. Traders have no time to stay with a downtrend stock.
Market ideas in stock trading
Simply, traders are the market movers. To succeed in trading, a trader has to expert on the best technical indicator and top 3 fundamental indicators.
Specially, a trader is a chart analyst. Hence, traders have better ideas about stock market. In many cases, they change their strategies and convert a trade into a swing trade or a short-term investment.
Although traders cut loss at early stage, they don’t sell an uptrend stock. They change their trading style to achieve the highest return.
Investors always try to pick the fundamental stock. They wait for dividend. They don’t need to achieve much knowledge about stock market.
They choose companies like Apple, Microsoft, Facebook etc. They know that these companies are profitable. Fundamental stocks comparatively provide little capital gain.
Stock trading career
Generally, traders take trading as a career. They trade in trading hours. Even some traders just work for a limited time and take trading for a living. It’s a wonderful career if you master on trading strategies.
On the other hand, investors put money on stock market for dividend earning. A stock price doesn’t constantly increase.
Hence, investing on stock doesn’t always bring huge return. If an investor can pick the right stock, he can earn good dividend. But investing is not a career for a living.
Traders daily life
Traders have enough time to spend with their family. Moreover, they have suitable time to do other physical business.
As they have huge time, they can earn from other sources. Investors, on the other hand, busy with full time job. They have little time to spend with family. Traders can use home office.
Why does trading as an excellent career?
If you want more time for roaming, you can choose trading as a career. Like other business, trading is also an attractive business.
You can trade any trading exchange across the world. But, you can’t survive in trading career until you have achieved enough skill and experience on stock market.
Many traders lose all trading capital within six months or one year of trading career. Trading career is risky until you have expertise on trading strategies.
Trading for a living
Imagine you have 100000 dollars trading capital. Your monthly expenses are 8000 dollars. Each month, you want to earn 8000 dollars from trading.
Your return percentage is (8000/100000)*100 =8% each month. Yearly return Percentage is (8*12) =96%.
Does it really possible?
This answer depends on your skill. How many investments will give you nearly 100% return in each year? You can earn maximum amount from stock market.
Let’s analyze this paradox elaborately. Suppose you have made 20 trade in a month. Your success rate is 50%. In 10 successful trades, you have earned on average 10% return and in 10 unsuccessful trades, you have lost 2% on average.
That means you can earn your living from trading. But the problem is you can’t make sure your success or failure ratio. In some months, you may have no gain but have loss. You can fix your target on year basis.
To your utter surprise, there is no guaranty to earn at all in a year. Market does not provide opportunity every time. If you make any mistake in trading, you may face huge loss. You have to wait and survive trading account for future trade.
Why do traders need other sources of income along with trading career?
Trading is risky career. You may not earn your living by trading if you have little capital and little experience. You should create some other sources of income in order to lead your normal life.
If you merely depend on trading, you may face extra pressure. You can take better decision if you are a mentally fit.
Why many traders fail in trading?
First of all, many traders fail because they have little expertise on trading. Before entering market, a trader should gather basics knowledge about stock market.
Secondly, they don’t follow the golden rule of trading- stop loss rule.
Thirdly, they take decision on the basis of emotion and greed.
Fourthly, lack of combination between perfect time and perfect stock.
Finally, they choose wrong stock or good stock at wrong time.
Trading is an independent career. Traders need time and dedication to obtain skill and experience. Once a trader learns all strategies and tactics, he can lead a standard life by trading.
A successful stock trader doesn’t need to spend all trading hours in front of trading screen. They prefer to gather knowledge about stock investing in order to execute right entry and exit strategy.
In my trading exchange, I can predict the right time of entry and exit.
Conclusion
At the beginning of market opening, share price goes uptrend. Before closing the market, many companies’ share can’t hold their beginning price.
I try to sell at the outset of market opening and put buy order at the last moment of market closing. Try to find out entry and exit time. I think, every exchange provides right time to buy or sell.
Founder of The Financial Ask
