Stock Market

Difference between Trading and Investing

Reading Time: 3 Minutes

Hey YOU!

Yes you! Have you ever wanted to know the difference between Trading and Investing?

Well, rest easy – because today’s post is courtesy of our good friend Renato from TradeRace

Without further ado… take it away Renato!

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Trading and investing are two different things and both have risks.

Trading refers to an activity of exchange like the exchange in currencies, information, other goods, and services. The goal is to gain profit from your existing positions. The stock market and forex are a good example of this.

Investing is all about expending money with the hopes of making a profit from it. The faster the ROI (return on investment) the better.

Starting your own business or supporting a startup company are good examples of this.

Both are risky, both can give you potential profit. The only question is, which is the right one for you? In order to know which one, you should know a few things about trading and investing.

Is trading and investing the same thing?

Although there is a big difference, investing and trading has a few notable similarities.

First off, both have risks and if you’re not careful there will be a possibility that you will lose money.

You should know that there are uncontrollable factors that will potentially put certain trading and investments at risks like natural disasters, civil unrest, and economic collapse.

There are also controllable factors that people can use to lessen the risks, like historical data and current data on the market, the current market trend and many more than can shape one’s decision and increase one’s chances of success.

Who makes more money, the trader or the investor?

This is a trick question since both traders and investors can potentially make it big or lose big as well.

It all depends on how good they are in studying the market, the business and makes sound decisions that allowed them to make fewer mistakes or no mistakes at all.

As long as you know how to make sound decisions that are based on facts regardless if you’re a trader or an investor you can make it big.

But why compare if you can be both right? As long as you’re willing to learn, anything can be possible.

  • Invest in getting high-quality data on your market of choice for analysis
  • Hire financial analysts if you need more help
  • Invest in your business knowledge
  • Invest in your skills to manage investments or trading

Long or short term investment?

That is the question that investors ponder often.

  • Long term investment refers to investments that are usually slow and constant in profit and ROIs are expected but will be achieved longer. Usually, long term investments are perfect for retirement since you will get consistent profit. It can be a main or a passive income like mutual funds. One thing is certain though if you want to get rich fast these investments might not be for you.
  • Short term investments or short-term profit are types of investments that are either short-lived or seasonal. In certain seasons you can expect that there will be profit to some businesses that becomes a need. Farming investments are a good example of this like fruits, vegetables, and flowers. There are businesses that will usually thrive following the change of the season. Although you have to wait for the change of the season before you can make an investment, the fact is that most of these investments have a higher return rate.

Trading and Investing is too hard, why bother?

Do you know why highly successful people like Robert Kiyosaki and Jack Ma always tell people during their speech to learn a skill that can make money and invest in something?

It’s because of two words called “financial freedom”.

Financial freedom is all about you no longer working for money but money working for you. Even if you’re sleeping your money is growing and you don’t have to worry about your future when you retire.

A few good reads for you on investment are:

○        Case Study – $1.1m to Invest, Now What? Part 1

○        Case Study – $1.1m to Invest, Now What? Part 2

When is it a good time to become a trader?

It’s actually a good time to become a trader these days. Why?

Because there are a ton of trading markets to choose from.

And the best part about it is thanks to technology, you can access these trading platforms conveniently in various devices like your desktop, laptop, tablet and even on your mobile device.

Aside from that, most of these trading platforms offer bonuses to entice traders just like what TRADERACE is offering.

How to start being a good trader or investor?

If you were not made as an investor or a trader and you don’t know where to start, there are some places and people that you can get inputs from. Follow successful people that are always giving talks about how to become a good trader or investor. Invest in books, attend training and seminars and more importantly test your skills.

What should you do or what should you become? A trader or an investor?

There’s no wrong answer here. The only question is, what is the one thing that matters to you or has sparked your interest? The fact is, you can be an investor, a trader or both.

You just need to have an open mind, invest in your skills and gather the right data for analysis.

Author Bio

Renato is a dedicated copywriter of TRADERACE, a trading championship where you can compete against traders all over the world and win epic prizes. Renato is best known for writing cryptocurrency, blockchain, and financial investment-related articles.  

Gravatar Profile:  https://en.gravatar.com/renatotraderace
Linkedin:  https://www.linkedin.com/in/renato-freitas1/

Blog:   https://traderace.com/blog  

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Great stuff Renato, thank you for explaining the difference to us.

What’d you think guys? Which one appeals to you more? Let us know in the comments below!

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