Are you a Trader or an Investor?

Buy!
Sell!

Do you hear yourself speaking softly as you read about the price calls made by analysts?
The "Buy" and "Sell" are vague terms given in price calls and forecasts, making them subjective voices. For instance, it was reported that Stock A should be sold. Did it specify that it should be sold during its highs (rally) or its lows (drop) and at which price? The second question comes, should one sell when it hit its lows and most likely result in a loss? You may also wonder if selling now is the right call as the prices may rally back up one day OR continue to drop (and never get back up). The better answer is to sell the rally as you will be selling it off a higher price than your buying price. However, if you do not feel good about holding and felt that you have made a mistake from poor research, you probably should stop losses. And there comes the last questions; are you a trader or an investor?

A trader changes positions by making short-term profits or losses. While an investor reads deep into a company's fundamentals before making a buy decision that will keep him holding for years. Investors do not make rash movements by selling on news or rally as they know the market's volatility will always exists (just like how the media will never stop its publishing). Investors get cash dividends that help to do the dollar cost averaging on its own. If he is holding $1,600 worth of A for a year and have so far received $100 of dividends, his investments has now turned to only $1,500. Thus, price drops can be compensated by dividends while price surges can be accompanied by dividends too!

When the public gets excited on favorable profits release or other good news, they tend to add into the price surge by bidding at high prices. While when the news turn bad, people get frantic and starts selling at low prices. In this manner, they start realizing that they made losses. Always decide a company's worth by its value and not the temporary noise made from prices and numbers.

Nevertheless, there are gauges that we can refer to, to aid our decision. Introducing the 52 weeks High and Lows of both Dow Jones and STI indexes. This enables us to determine if we are buying at a low price. The same goes for individual share prices, where we can make use of its 52 weeks range. However, this is only based on a one year period. The past and the future should not be forsaken. Remember that this is just one of the tools one can use ; but not solely one we should depend on. 

52 Weeks Range