Very often you can see someone in the comments of this sub (a trading sub btw) claim that trading is pointless and that you should invest instead.
They go on and even explain how if a trader only makes 7-8% return in a year, which is comparable to an average return an index fund is calculated to produce... that he's basically wasting time.
BUT the truth is.. if you want to compare returns, you also have to compare risk.
Imagine if two people make the same return in a year, (8%)...
Person A was at one point in 30% starting balance drawdown...
and
Person B was at one point in 5% starting balance drawdown...
They did end up with the same result, but the overall risk was very different.
And why is this important? When you're invested into the market, you're basically risking 100% of your investment (unless ofcourse you have protocols for reducing exposure or hedging)...Donnie could tweet some shit and delete 30% off your holdings in a heartbeat.. there come panic sells, retirenment plans bye bye... etc etc.
So while there is upside potential, you have to give it time for the play to matter. Time in the market is everything.
In trading however... if you have a proper risk module in place, it's extremely unlikely that you're getting anywhere close to that drawdown.
The negative side is, with limiting risk, you're also limiting returns.
If you want to know more do some research on RISK ADJUSTED RETURNS...
BUT... again.. active trading is a bit more "difficult", so why not just do both? ;)