What do I want to do in the financial world?
Good morning community!
In this new article I would like to try to answer some recurring questions. In fact, those who approach the world of finance and beyond often ask us what broker, bank , etc. to start with.
This information should be sought not at the beginning, but at the end of a course of study aimed at first understanding what I want to do in the financial world. Let us first worry about understanding the financial instruments, then where to buy or sell them, not the other way around.
The answer to this question must necessarily be divided into two different roles, the investor and the speculator.
What do I want to be in the financial world? Investor.
Aninvestor is a type of person who tends to invest in the medium to long term in equities, etfs, bonds, and other types of investments such as can also be pension funds. Therefore, we can say that he also uses accumulation plans (PACs) to increase his positions over time (monthly, quarterly, etc.).
He does not watch the markets every hour or every day but has a very serene way of managing his investments without worrying about daily swings in the markets, does not get giddy when they go up, and does not get anxious and panicked by the red sessions of world stock exchanges.
What do I want to do in the financial world? The speculator.
In contrast, the speculator is the person who intervenes by watching the markets minute by minute, trying to take advantage of their volatility. It operates quickly and several times a day to make daily profits.
The speculator then through scalping (opening and closing positions on various financial products in a very short time frame, even in the order of a few minutes) makes numerous trades on even different assets, e.g., stocks, forex, indices, commodities. Therefore, the speculator does not invest for the long term and is not considered an investor.
What do I want to do in the financial world? Investor, speculator or can I do both?
Yes, I can be both an investor and a speculator but as long as I have a certain mental approach. In fact, it is not easy because as you see they are two completely different ways of doing things. Without maintaining a clear separation of the two roles in our minds, we could not operate at our best, being conditioned by the individual stock market session.
You may be wondering: but aren’t we always talking about the same area?
Of course we do, the liquidity we put in always ends up in the same place, which is the financial markets. But here I want to emphasize how the two roles imply two different ways of investing and viewing investments with completely different time horizons from one another.
The time factor and the mental aspect are the central elements that each of us must focus on. For example, those of us who have been doing both (investors and speculators) for many years no longer see this as a problem, but to complete 100%, in my opinion, comes with time.
These then are the two questions to ask yourself to have a major growth process in the world of trading and finance before choosing any brokers and banks.
Once we understand this fundamental distinction we will know how best to manage our money in the markets, being clear about our time horizons and the portfolio diversification we want to do.