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Investing and trading are common words used when we discuss the financial markets. However, these words get intermingled quite a bit, without much understanding of the fundamental concepts. Typically, trading is considered to be riskier, and investing is relatively safer; however, that may not be true! So we are going to discuss the differences and similarities between these two activities
Take home message:
Investing is Trading - The only difference is TIME! One action is NOT better or worse than the other. It all depends on how soon you want to make a profit.
Both investing and trading need an initial layout of your funds (or assets) with an expectation of profit.
They both involve only 2 actions: buying and selling (of any financial instrument, such as stocks, ETFs, bonds, mutual funds, money market or CDs or Forex.. etc.)
When you understand the concept of time and master it, you can be successful at both.
Time is Money:
Both investors and traders want to make money, but the difference is in the time in which they're looking to make money. Because time is relative to every individual (for example 1 week may be too long for someone, while 1 year may be too short for another individual), the concept of trading vs. investing is relative.
In general, a short time interval will include: days to weeks. An individual looking to make money in these time frames would be called ‘day trader’ or ‘swing trader’. If you are looking to make money in a few minutes you can be considered as a 'scalper'. Therefore, a short term investor can be considered as a trader.
In general, a long time interval will include: months to years; typically >5 years. A person who has patience and looking to make money in this time frame would be called an investor. Therefore a long term trader will be called an Investor.
Here are some of the key features of investing vs. trading:
Regardless of which choice you make we are here to help you succeed
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