An investor typically is made distinct from a trader. An investor puts capital to use for long-term gain, while a trader seeks to generate short-term profits by buying and selling securities over and over again. Investors typically investidores Forex returns by deploying capital as either equity or debt investments.
Equity investments entail ownership stakes in the form of company stock that may pay dividends in addition to capital gains. Investors are not a uniform bunch. They have varying risk tolerances, capital, styles, preferences and time frames. For instance, some investors may prefer very low-risk investments that will lead to conservative gains, such as certificates of deposits and certain bond products.
Other investors, however, are more inclined to take on additional risk in an attempt to make a larger profit. Scalp traders, for example, hold positions for as little as a few seconds. Institutional investors are organizations such as financial firms or mutual funds that invest in stocks and other financial instruments and build sizable portfolios. Investors may also adopt various market strategies. One example of this would be the “value” investors who seek to purchase stocks with low share prices relative to their book value. The growth of low-cost target-date mutual funds, ETFs and robo-advisors are responsible for this surge in popularity.
Investors can be distinguished from traders in that investors take long-term strategic positions in companies or projects. Investors build portfolios either with an active orientation that tries to beat the benchmark index, or a passive strategy that attempts to track the index. Investors may also be oriented toward either growth or value stock picking strategies. The offers that appear in this table are from partnerships from which Investopedia receives compensation. A speculator utilizes strategies and typically a shorter time frame in an attempt to outperform traditional investors.