Financial markets allow for a variety of different approaches, but some of the most common are to approach as either a spectator or as a speculator. Let’s talk about some of the differences and pros and cons of each approach to the financial market and gold forex trading. Speculators tend to have a need to prove their financial chops by continually putting capital at risk in the market. Spectators tend to stand back and watch, waiting for the perfect moment to swoop in and make a killer deal and may end up sitting on their cash hoards for months or even years before deciding that an opportunity is too good to pass up.
A focus on central banks and the gold standard, as well as economic policy is how most spectators approach the market. They have a deep understanding of the financial metrics that drive market dynamics and frequently engage in online debate between their counterparts but unlikely to commit funds to back up their opinions. Spectators may rationalize their lack of risk-taking by blaming market volatility, greedy money managers and politics. These views can all help them retain their high-level and objective view of the market as they track economic cycles and ease into investment opportunities when they feel the time is right.
Speculators can be defined are not attached to any specific ideology or viewpoint yet continue to profit from capitalistic enterprise. Speculators also enjoy a high degree of objectivity in their approach to the market, and understand that all changes in the market – good or bad – can represent opportunities for the prepared individual. They check their personal beliefs and baggage at the door, refusing to let personal dogma get in the way of pursuit of the almighty dollar. They are prepared to change their investments on a dime and are always looking for the next set of opportunities.
Which Approach Wins?
The short answer is: it depends. Some investors start aggressively into the market, fail spectacularly, and then switch to a more conservative spectator approach. That may lead us to the consideration that starting out as a spectator and then making a conscious decision to move to being a market speculator may be the safest approach. Then again, if you have speculator tendencies, the safest approach is unlikely to appeal to you.
Both spectators and speculators see market opportunities differently; speculators are more involved on a daily basis in the actual workings of the market which may give them a longer-term edge over spectators, who sit back and wait for the big win.
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