An investor is a person or an entity, who utilizes their assets to receive a financial return in the future. There are various instruments an investor may take advantage of, including stocks, bonds, commodities, exchange-traded funds (ETF), foreign exchange, real estate, and many more.
It is recommended to distinguish passive and active investors. Passive investors tend to maximize their returns by minimizing their performance in the market. They try to avoid fees and hold their assets for a longer period. They do not try to profit from short-term market fluctuations. One of the types of passive investing is related to social trading. When using the platform for copytrading, an investor may profit by copying the actions of professional traders with the best performance. It helps him/her to create a good portfolio and make a stable income. On the other hand, active investors focus on short-term opportunities and open more trades within the short term. Their market decisions involve more risks, than the actions of a passive investor. It is also worth mentioning that active investing requires a more prominent education to succeed. However, if an active investor is familiar with technical and fundamental analysis and sticks to a reasonable risk-reward ratio, he/she may get higher returns compared to a passive investor.
2020-07-24 • Updated