Fullerton
Those who are new in the stock market will come across certain stock market jargons which may confuse them. One of them is associated to the individuality and the behavior of the stock market investor or trader. Even though the terms the stock market investor and trader are often used interchangeably they are actually different.
Staale Fossberg differentiates between stock market investor and trader on the following parameters
Investing refers to buying assets with the objective of enjoying ownership advantages such as value appreciation, dividends, and capital protection over long periods of time. Investors mainly focus on the price that they are paying for an asset and the probable long term return that asset is expected to deliver. In contrast, a trader would disagree that holding a stock for such an extensive period of time is very unsafe as several factors can affect the company and most of the capital appreciation usually occurs in short periods of time.
Staale Fossberg, the CEO of My Private Trade also referred to as MPT has established this in cooperation with Morten O. Andersen at Simray Holdings LLC. He has excellent communication skills and with his connection to Simray, he has been able to create the most dynamic online concept known as My Private Trade in Europe. He points out the differences between stock market investor and trader which are explained below:
- A stock investor has a longer time span and can hold stocks in multi-year time frame. On the other hand a stock trader has comparatively shorter time horizon and is not eager to hold the stock for more than a month or two. There are a large percentage of traders who do nothold the stocks after one day or one week.
- Staale further says that stock traders and stock investors essentially approach the stock market with same objective but utilize different formula. They have the same goal which is to maximize their return, but the stock investor tries to get this through a single transaction, while the stock trader selects manifold transactions, but in fast succession. The stock investor just holds and buys the stock while the stock trader sells and buys stocks on a continuous basis.
- Stock investors usually look for stocks for investment whose rate too low. Investors need to be very patient and should have the expertise to hold stocks till the market realizes their actual worth. On the other hand, stock traders are less worried about the valuation of the stock and are simply concerned about the price movement. They are prepared to buy an overrated stock if the price movement recommends so. In the same way, they can short sell stock whose rate is too low if the price movement is in downward direction.
Staale Fossberg says one should use the above parameters to understand the psychology of stock investors and traders before entering the market. Determining the personality at the very beginning will enable them to employ the right techniques and tools to be a winner. Even though Staale comes from a background in radio and TV broadcasting, he has vast experience in finance, trading and investment.
