Trading Yoga

How do I know if I am a trader or an investor ? Well it is almost a wrong question. The right way to ask the question is how to identify if the decision to buy (or sell) a stock is an investment decision or a trading decision ? Will the duration of holding determine if it was an investment or a trade ? Answer is No, there can be trades which last for weeks and months even years together. And there can be investments that are squared off within days or weeks even. Though, generally shorter horizon of holding is perceived as trading and longer format is perceived as investment. Will the tax liability determine if it was an investment or a trade ? Maybe the regulation may have some definitions to classify for tax purposes. However, tax kicks in after the exit from the position and not prior to it. Even then, taxation is not the right basis to classify an action as investment or trade. Will the instrument determine if it was an investment or a trade ? To some extent, the ins

QUOTE  Investor Action can Depend on two factors in a stock. Price Action or Business Action.  Focus on the 2nd. As long as business still makes sense and valuations still supportive, ignore the first and stay invested. Jiten Parmar Thoughts/Lessons from the Quote Most people buying shares (even as investors) don't understand the business (let alone business action). Most people understand the price action. Emotions move with price action because emotions does not have the anchor called understanding the business (and business action). And many times, business action waves the red flag, price action is bullish and the ignorant investor gets trapped. The first step is to acknowledge whether we understand the business or not. In most of the stocks I have invested, I have to confess that my business understanding is limited (as compared to some of the seasoned investors). If our understanding of the business is limited and/or non existent then we