Stock trading experts would know why trading and investing characterize two different mind frames.
Are trading and investing one and the same? Well, there is a slight difference. Investing has a lot to do with assessing a company’s performance, while trading deals with anticipating the moves in a stock. That was the case, it must be remembered, when renewable energy, particularly solar energy entered the market.
Traders’ Optimism with Renewable Energy
The technology had great potential though that did not translate to companies making money. While cynics maintained that these companies would never attain profitability, we see now that companies such as First Solar (FSLR) have become profitable and reached the stage to be judged by the money they make. But when it all started, it was merely the hope for practical renewable energy that made traders buy its stock.
And that’s the stage hydrogen fuel cells are in now. Companies in the field are not exactly minting profits, but there can be no denying the amazing potential they have. This perception creates new trading opportunities. The one year chart from June 2015 to June 2016 of FuelCell Energy (FCEL), a company specializing in hydrogen fuel cells, reveals a great deal of volatility. For a long-term investor, this is something to stay away from. But for a trader, there is great opportunity. FCEL has now reached the levels of previous lows which makes it a choice to buy at this stage.
It also helps to understand the general perspective to comprehend the risk that would be involved in any trade. FCEL’s recently released earnings missed out on the top and bottom lines, which is worrying when considering the long term.
Why Hope Persists for FuelCell Stocks
However, the company has recently partnered with Exxon Mobil (XOM), which has brought in a great deal of interest. It has revealed significant plans for increasing its margins through more efficient functioning of its plants. What this does is reinvigorate hopes of a brighter future for fuel cell technology, which could lead to the company’s stock recovering in the coming months.
That’s how different trading is from investing. The former involves a lot of anticipation regarding the movement of the stock, and not assessing a company’s immediate performance. With the FuelCell example, there was a massive drop in the actual results but traders will be hopeful of a bounce that could likely come. This, along with an enticing risk reward profile, makes FuelCell an opportunity worth checking out for people with the psychology of a trader and a shorter time frame.
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