No. of Recommendations: 2
Hi Nigel,

In fact Cramer says that an "Investor will make more than a Trader in any year."

Cute Cramer soundbark... but still leaves the distinction between them ambiguous.

I'd say Trader versus Investor is a scale of continuum... with a pure Trader being at the extreme of controlling variables to maximize results, and the pure Investor being at the extreme of maximizing effective net results by seeking a more attentionless and concernless involvement position.

Between a Trader and an Investor "on their game," when measured in absolute revenues, I'd say Traders make far FAR more than Investors... but at a far greater cost of resources and expertise.

Investors, OTOH, probably generate a greater rate of return overall when you factor in the efforts and concerns committed.

In MY mind;
Trading is like a JOB... it take a HUGE amount of your moment-by-moment life attention, and offers the potential commensurate rewards. Done properly, SAFE trading returns can be plentiful, and while they take less capital than investment returns, they require far more in attention to compensate.

Investing is a "heavy flywheel," that can work in your favor even when you goof off and take a 6 month sailing vacation to Tierra Del Fuego... but safe investment returns take a far greater amount of capital resources than safe Trading returns.


If you need a given annual revenue... say $100,000 (to pull a number from my butt,) and you can get a 200% annual return from Trading as a JOB... or a 15% return from Investing... you can see that you can TRADE with far less capital, AND generate additional revenues to go toward your INVESTING capital.

Financial Freedom comes when your assets generate sufficient free cashflow WITHOUT your direct attention. Effective trading generally requires direct attention (but it IS hellaciously fun!)

Cheers,
Dave
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