Stock: Speculation or Investment? (1)

By | 2014/03/25

I started stock trading 8 years ago.

I retreated from trading market in January this year completely.

While listening to somebody talking about stock trading, the words usually ends with “earned lots of money” or ” earned 1,000 USD in just one day.”

People may feel he/she must be good at stock trading.

But what I want to say is, the profit rate is much important than the profit amount.

Because the more one invested, the more amount of money may be earned and vice versa.

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For example, if one invested 100 thousand USD and got 1,000 USD profit, the profit rate is 1%.

If one invested only 5,000 USD, the profit rate would be 20%.

It is clear to understand that even with the same profits, the profit rate can differ over 20 times.

So, if you hear of some talks about stock trading again, you can try to ask the profit rate, not the profit amount.

OK, it’s time to go back to the main topic.

Are speculation and investment different? How different?

Is stock trading speculation or investment?

I believe stock trading can be both speculation and investment.

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It is investment while you trade stocks in the basis of the long-term strategy and market trends, and it becomes speculation if you trade only by reading the feeling of the public in the short-term way.

Definitely, both ways can bring you money.

How about myself?

I did both, actually.

But no matter what I did in stock trading, I learned one thing from them.

“Stock trading is a fight to your own greediness”

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