Tuesday, July 24, 2012

Trader vs. Analyst

There is a big difference between an Analyst and a Trader.
An analyst tries to be correct on his call whereas a trader should think about profit only.
Analysts study industries, companies and economic conditions. Traders study price and could care less what company the price represents.
Analysts are paid for being right. Traders are paid for managing risk. These two skill sets are a world apart. Most of the people who try to be traders by being analysts usually lose their grip at both ends of the rope.
Peter Brand Blog


Jitender Yadav said...

Respected Sir,

Great to read your new post after a long break.

Your Fan
Jitender Yadav

Dinesh said...

Dear Sir,
Thanks for sharing useful comments.
I agree a trader should focus on the trade to make profits and leave the analysis (reasons etc.) to the analysts because if the trader tries to find the answers, there may be a possibility of getting too engaged in that and so the trade may get affected. At the same time, I think the trader should have high level of understanding of what is going on. This will allow him to enter the market/trade with confidence. Just for completeness, the 'high level understanding' does not negate the use of trading tools (charts etc.), which are must for a trader.

Bashu said...

What are your thoughts about Jesse Livermore's notes given below? It seems for him studying underlying condition helped a lot!

Jesse Livermore's notes:
"But I can tell you after the market began to go my way I felt for the first time in my life that I had allies — the strongest and truest in the world: underlying conditions. They were helping me with all their might. Perhaps they were a trifle slow at times in bringing up the reserves, but they were dependable, provided I did not get too impatient."

SWEETY said...

good one in deed - i liked it as it represents the hard / harsh fact.

sometimesbullsometimesbear said...

Valid point for a high frequency day trader who needs to focus only on price all the time.

While a professional positional trader is both a trader as well as an amateur analyst. He has already fed his numbers in the trading platform and he is looking at various other things also while he is free.