Naira Metrics
Investing and trading all have one end goal – making returns and generating profits. Both market participants go into a trade or invest in an asset to make money from it. However, both participants have different approaches to get their objectives. While an investor would adopt a longer time frame to actualize returns, traders follow a shorter time frame to make profits.
For example, someone who invests in shares typically does that for capital appreciation or possibly returns through dividend income. Traders who are most times speculators in assets spot opportunities and want to make quick profits on price movements. In some cases, they make the wrong bets and of their own volition become investors as they have to wait long periods to get out of their positions so they do not incur a loss.
However, both participants make one common mistake, emotional investing. Reacting to news is one mistake beginner investors and amateur traders make. News is fundamental that can potentially change the course of an asset. However, they often defy reasoning.
In the 1930s, John Maynard Keynes said, “The markets are irrational longer than you can remain solvent” and that applies today as market movement – up or down often makes investors second-guess themselves.
That is why people advise not to invest or trade the news. Let me bring two examples. Look at the Credit Suisse chart and the Great British Pound. After negative news that affected Credit Suisse and the United Kingdom, prices have gone to recover instead of plummeting further than speculators imagined. ..
