HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Understanding the Difference Between Trading and Investing


In this article, we are going to talk about the differences between trading and investing. They are wide-ranging however, they are both good ways of potentially making financial gains on the global financial markets. Similarly, both investors and traders seek to gain from global financial markets. Although, they use different ways to realise their objectives.

Ultimately, an investor aims to gain from the market over several years whereas a trader’s aim is to make gains from the financial market over days weeks or months. A trader looks to benefit from the movements of the financial market to achieve smaller gains but more regularly. An investor’s objective is to profit by buying and holding, aiming to make a greater profit on transactions over time.

The Difference Between Trading and Investing 


The difference between trading and investing is that a trader frequently buys stocks, currency pairs, commodities, and any other financial instruments. Therefore, he then sells them at a higher price in order to gain from the increase in their value. In fact, a trader may do this many times during the day to achieve the desired return. A trader usually aims for a monthly return of around 10%. An investor aims for a 10% to 15% return per year.

Financial gains in trading are made by monitoring market movements over short time periods. These gains are made by purchasing at low cost at the early stages of the market gradually moving up. 

In addition, when a trader believes the asset value is about to drop, he will trade the asset at a higher value. He/she has the intention of purchasing the same asset at a lower price to profit from the market’s fall, again over a short time frame.

Protective actions in trading such as stop-loss orders can be implemented to avoid losses up to a pre-stated price level. This is done by setting the trading platform to end negative positions at a certain point. To obtain the highest possible profits and the smallest possible losses within a particular time period. In other words, traders use technical analysis, such as graphs, moving averages and stochastic oscillator indicators to identify and plan for potentially lucrative trading opportunities.

Trading Styles


In this paragraph, we’re going to talk about trading styles. A trader’s approach can be identified and their style summarised based on the period in which stocks, commodities and other financial instruments are traded:

Investors


Firstly, an investor has a more careful investment strategy than the risk-focused day trader. They focus on long-term returns, keeping a hold of and profiting from investments over many years.  These provide long term returns. Secondly, investors also benefit from lower trading costs, stock splits, dividends, and interest over the years. Market volatility should not be hugely concerning for an investor. The focus is on making long term returns. Finally, an investor is not preoccupied with technical analysis. They observe general indicators such as P/E ratio, management forecasts, and company value. 

Investing vs. Trading – The Key Differences


In this paragraph, we’re going to talk about the key differences between investing and trading.

Conclusion 


We hope this article has made you more comfortable knowing the difference between trading and investing. Understanding these key differences allows prospective traders and investors to formulate their trading plans and identify what traits match their own personality. SquaredFinancial is a market-leading broker and offers endless trading possibilities. SquaredFinancial provides access to numerous ‘Contracts for Difference’ enabling easy trading of commodities, forex, stocks, indices, and futures. 

#source


RELATED

What is Notional Volume and Why Does It Matter

Notional volume is often used as a measurement when valuing a derivative contract. There are also various other ways derivative contracts can be valued...

Why Trade Precious Metals

Precious metals are a popular way to diversify a trader’s portfolio. They also act as a hedge against currency inflation or economic instability. Examples of the three most popular traded precious metals are gold...

All you Need to Know About the Best CFDs Stock Trading Platform

Are you into trading CFDs on stocks? Then you are going to need an online broker as most traders nowadays buy and sell CFDs on stocks through an online CFDs stock broker.

Unpacking Demo Trading Accounts: Your Comprehensive Guide

Venturing into the world of trading can feel like navigating a maze, especially when you're diving into complex domains like forex, precious metals, or cryptocurrencies...

Everything you should know about mutual funds

A brief introduction to mutual funds and why you should invest in them, the risks, who should invest, their performance and the alternatives. Every year...

Best Day Trading Laptops in 2023

When discussing the requirements for successful trading, pro traders often mention having the right tools. A quality laptop is among such tools. A trader needs a good laptop just as much...

How to trade stocks with maximum outcome

Investing in stocks is an attractive way to become part of the world's best-known companies. However, not every investor knows how to trade stocks efficiently...

Understanding the Piercing Candlestick Pattern in Trading: Benefits and Limitations

The vast world of trading is replete with countless patterns and technical indicators, each promising its own set of advantages. Among these, the piercing candlestick pattern stands...

TOP8 Mistakes Forex Newbies Make

We all can be wrong from time to time. It's a common thing for the people who would like to gain experience in any area of life. There are no actions without mistakes...

Unlocking the Power of Fibonacci Retracement: A Beginner's Guide

Trading with Fibonacci retracement might sound daunting, but it's a remarkably valuable tool once you grasp its fundamentals. Let's delve into the key concepts and step-by-step guidance...

Gold Trading Online: Everything you Need to Know

Gold is considered a popular precious metal and is also the earliest mined metal in the world. It is believed to have originated from space debris and not from planet Earth...

Stocks: Top-5 of what you'll want to trade

If you look at the currency charts, they may seem chaotic most of the time. On any timeframe, be it long-term, mid-term, or short-term. The basic reason for that...

What is a stablecoin?

Stablecoins play a significant role in the global cryptocurrency markets, providing a range of use cases for traders, investors, and active crypto users...

Short-term trading: Features and Tips

Currency speculations on Forex are short transactions ranging from a few minutes to a month, based on technical and news analysis. In contrast to medium...

Bitcoin: secrets of profitable trading

Bitcoin: although this currency is virtual, many people earn and have already earned real millions of dollars thanks to it. More than 1,000 people...

Top Trading Picks 2024: Mastering the Financial Markets for Optimal Success

As we step into 2024, the financial markets offer a kaleidoscope of opportunities for both novice and seasoned traders. With an overwhelming array of advice on financial planning and investment strategies...

Investing vs. Trading: What’s the Difference?

Over the past couple of decades, many people started showing interest in profiting from financial markets, whether through trading or investing. However, it has become evident...

The Discipline of Setting your Stop-Loss Order

Are you wondering how you can more easily manage and monitor your trades? This article will show you the benefits of setting stop-losses in your daily trades!

What Is A Demo Account And Why Is It So Important?

A trader gradually learns the essence of exchange trading. In this case, he can choose two ways - to use a demo account or trade immediately for real money...

Top6 Benefits of Forex Trading

Forex trading, also referred to as foreign exchange, is the process of exchanging currencies to potentially make a profit, usually for trading purposes...

FP Markets information and reviews
FP Markets
81%
RoboForex information and reviews
RoboForex
77%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.