Why People Are Obsessed towards Trading and not Investment

April 20, 2017

Welcome to the age of instant gratification. The demand for the instant seems to be seeping in every corner of our society. The types of food we eat (the high range of ready to eat meals or the typical fast food chains, instant reviews to the food we eat) you see it all around you, let that be in the retail market (speedy deliveries), or the entertainment business (you have latest movies with instant virtual streaming available), travel (apps that help you book cabs, no waiting for them anymore, apps to make hotel and restaurant reservation).

Most of our lives are hyper-connected. Living in the now and thus subconsciously continually giving in to the era of instant gratification and the interim loss of patience.
Now let’s understand the personalities of Trading and Investment.

Mr Trading

Mr trading is very competitive, most often taking risks while meeting the desired results. To some, he may come across as aggressive or impatient, but it mostly stems from the ambitious aspiration he has set for himself. Mr Trading’s primary focus is on quantity, as he believes eventually quality will be achieved through chance. He is very outgoing and is usually revered by most people he meets. His friends describe him as a workaholic, as he has an obsessive need to take risky decisions in the nick of time and hence is always on the run. There is a strong sense of control that he constantly demands.

To be specific he gets his drive to be committed to his line of work from the constant adrenaline rush that he gets on cracking the right deals and overcoming risk if any in the process. He is usually under a lot of stress but loves the mystic and the adrenaline rush that his job gets.

Mr Investment (Arch Nemesis of Mr Trading)

The steady worker, who derives his motivation from the end result. When faced with competition focuses less on winning or losing, but does the right thing to eventually get the desired result, and in some sense enjoys the process. He is well networked and also well respected within by peers. Is known to be informative and analytical. A hard worker who is organised and calculative hence is gradually and eventually accurate in getting the set target.
So you see Investing and Trading are two very different methods in attempting to make profits in the financial markets.

Investing is a method of gradually building wealth over an extended period of time through the buying and holding of stocks, Mutual funds, Bonds and other investment instruments. Investors often enhance their profits through reinvesting or compounding any profits and dividends into additional shares of stock. Investments are long term, ranging from a couple of years or even decades, in turn, taking advantage of perks like interests. Markets may fluctuate but investors usually ride out the lows with the expectations that the losses will be covered with rebound.
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Trading is, on the other hand, a more frequent buying and selling of stock, commodities with the goal of outperforming the buy and hold investing method. Profits are made by buying at a lower price and selling at a higher price during short intervals. With a myopic investment goal to make money.

Everyone likes making money and usually, that is the driving factor, the “high” from making more out of less, it’s not only a natural high but an adrenaline rush, and like all addictions, one time is never going to be enough. It is a short time commitment to big results or even big losses and the risk makes it attractive.

While Investing is a more proactive method to make your money work and make more money for you. In investing you buy an asset like shares and the straightforward idea is to sell it at a future date when the value appreciates. It’s common knowledge that good investment is a sound way of growing wealth, it’s a long term commitment.

However, it is interesting to know as true Arch Nemesis, both investment and trading cannot completely exist without one another. You see without trader’s, investments will not have any liquidity to buy and sell stock, and without investors, traders will not have any origin or any source to buy and sell from, hence no one can be grander to another.

The only place where the scales lean are the personalities that get attracted to the fast and the furious, and in that Trading emerges as the prototypical winner.

 


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