Know that stock investing isn’t investing. Stock investing is also not gaming. But the lines between trading, gaming and investing can be thin. You should understand coasterchitchat.com where the difference is. You will be in a better position to follow your trading strategy. You will also bring in more cash. You should avoid the trap of gaming. This way you will be in a better position to preserve your capital.
What is the difference between investing and gaming? It is the risk and return tradeoff. The odds are generally for your benefit in investing. However, it does not mean that you’re going to make money. It only means that there is a good chance you will make money if you have done pursuit well. Some day traders end up gaming.
Investors, traders and gambler have one thing in accordance that you need to understand. They put some of their money on risk. They hope of getting a return if they are right. You should take trading as a business. You should also know about the potential risk. You should also know about the sources of your potential return. This will make you better off in the long run.
What is your reward? Your reward is that you get fair compensation for the risk you took. What is your risk? Risk is that you won’t get the expected return. Risk is the probability of a loss. The riskier something is, the more odds of a loss.
The reason there is a balance between risk and reward is that financial markets like the stock markets and the currency markets are reasonably efficient. The foreign exchange market efficiency means that prices of securities and currencies reflect all known information about the companies and the economy.
Investing is putting your money at an increased risk to produce a return. Investing is the basis of modern day capitalism. It is the way that businesses get started, roads get built and the economy grows. Investing is always focused on the long term. In investing, you obtain stocks of companies for three to five years at least that are good but have gone out of favor for now.
What is trading? Trading is the act of buying and selling securities. Investors also trade but they trade only when they find a good opportunity. They expect that by investing they will give them a good profit in lots of years time.
Traders look to take advantage of short term price errors in the markets. Trading keeps markets efficient by creating short term supply and demand that eliminates price errors. Rumours is related to trading.
A gambler puts the money on line in the hopes of getting a profitable settlement if a random event occurs. The probability of the particular random event occurring is usually tiny. The odds are always up against the gambler. They are in favor of the house. However, a gambler always believes that the probabilities can be survived. He wants to win big.
Always remember, trading is not gaming. Traders who do not give attention to their strategy and its performance can cross over into gaming soon. They view the blips on their monitor as a game that they can win. Soon they are trading almost like they are in a casino with probabilities as bad as a video slot. They start making trades based on emotions without any regard to the risk and return.