Trading Journey: Trading versus Investing

I wish to share with you my journey into trading and hopefully, you can see whether it is right for you. But first…..

Know yourself

At this point, you REALLY need to decide on the following before going any further. What type of an operator are you?:

  1. Are you suited to be just a trader?
  2. Are you suited to be just an investor?
  3. Are you confident of being very clear, at any point in time, whether you are able to perform effectively as an investor or trader, and not be confused or be Jekyll and Hyde as the thinking suits you?

There is no doubt a lot of different perspectives and beliefs in this topic of investing versus trading. What I want to put out upfront is this, if you do not think you can crystallize the “why” you want to go into trading, and you do not have a clear idea as well as the conviction of which operator you are at any point in time, you should avoid doing either at the same time.

Many have believed that trading and investing to be 2 very distinct camps and they usually avoided doing the other when they are massive fans (believers) of the camp they are in. I’ve been like that before as a fervent value investor. Almost felt insulted when people thinking I am a speculative trader. Really really serious, if there was a way to describe the animosity between both camps (sometimes), then I would only think of the Montagues and Capulets. But now that thinking has evolved for me, I personally believe that, stretching that comparison a bit, they are 2 sides of the same coin or that they are star-crossed lovers meant to form an incredible love story (sans the tragic end).

So I now subscribe to the camp that they are not mutually exclusive and the alternative knowledge, skills and techniques can be employed by the faithful investor or trader to improve their operation. I do believe that finding the right way to do trading using strong elements and the experience in fundamental analysis, financial and economic knowledge as an investor could greatly improve the chances of you building a credible side income. Therefore, I belong to the 3rd kind of operator. I have a portfolio which I build through value investing and also having a trading portfolio. I apply the techniques at the same time but for 2 distinct objectives – investing or trading.

For those that are not convinced, and think these 2 should never be mixed in your life; hey, no worries! You are definitely entitled to what you think is right and that will be your journey. And you are always welcome to check this out later if you change your mind or are just curious. As a huge fan and practitioner of value investing for many years, I can imagine how you are feeling. Better to be proficient at one for now.

How Should One Approach Mixing These 2 Disciplines

I’ll be honest to say I have stayed away from trading and technical analysis for the longest time. Again, I was resolute that I should never mix these 2 disciplines even though I had a nagging belief through so many common points of references that could be used for trading and investing discipline. It would come to a chance meeting with the right teacher and through certain affirmations that confirmed that I was right. As you can see, serendipitously or not, I only needed to find the right trading style and approach to be able to make trading viable for me.

Now that I have found the right approach, I have since set aside a small segment of my portfolio into doing only trading in the right instruments that give me the best leverage and gain me a meaningful side income by using the experience and knowledge in the financial world that I have gained through years of doing investing. I think of it as similar to setting up a business in trading and managing it accordingly. I performed months and months or paper trading to convince myself that I could replicate my trade positions consistently enough for modest gains within a shorter time frame to investing. The powerful thing is the ability to scale up the initial capital if the gains are sufficiently and consistently profitable.

It is with this that I am sharing with you my trading experience from this point of my journey, quite very much in the beginning stages. I am really excited and looking forward to this part of the journey. Come along as I share more in the next bit of what I do.

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