Am I a trader or investor

 Author: BlakeATO(Community Support)Community Support

ATO Certified Response17 Jan 2022

Hi @Sallyanne

There's more that goes into whether you're an investor or trader than just the number of trades you've done, or the amount for each trade.

You'll need to look at several factors:

• the nature and purpose of your activities
  • Do you intend to make money from the change in value of the shares (trader), or from the dividends and receipts (investor)?
  • Do you have a business plan? This could show: analysis of current market, when profits can arise, a clear decision-making process when to hold/sell.
• the repetition, volume and regularity of your activities
  • The higher quantity of share transactions would indicate a business.
  • A business would expect to purchase on a regular basis through a routine method. For example, if all purchases were done in the span of one week, that does not indicate regularity.
• whether your activities are organised in a business-like way
  • Do you study daily or long-term trends?
  • Do you analyse companies' share return expectations and annual reports?
  • Do you seek advice from experts in financial investment?
  • The higher your formal education or skill, the more likely you are to be a trader.
• the amount of capital invested
  • This is not a crucial defining factor, but it may be your tipping factor to determine it.

You can read about all the factors of share investing versus share trading on our website.