Investment VS Trading

Investment and trading both involve the purchase of goods, in hopes that they will appreciate in value. However, there are significant differences in these contrasting approaches with the first element of differentiation is the period of time.

The investment is something that everyone should be involved in some way or another. Many do not consider themselves investors, but if you have (or are buying on mortgage) to your home or have a pension plan or insurance policy then you are an investor and your financial well-being depends on the performance of the shares and / or property.

Trading is a minority activity seeking to profit (income) for short-term purchases and sales of goods, or put simply selling higher than the purchase price.

The investment is a long-term effort. It can be for life, as in providing a roof over your head, or over the years, how to put their children to college or to provide an income in retirement.

Instead the market is relatively short term, ranging from a trading day in which the positions are opened and closed in the space of a day to keep them for a month or more.

Investments usually consist of holding real assets such as stocks, bonds, real estate ... Trading can mean holding assets but also consists of devices such as short selling (selling an asset you have in the hope its price will fall), making use of margin (or leverage - ie trading with borrowed money), Foreign exchange (FOREX) trading, and more sophisticated vehicles such as options, CFDs (Contracts for Difference), Spread Betting, etc.

Investment deals with gaining both an increase in asset prices and income earned from holding the asset (interest, dividends, rent ...). Trading is mainly to profit from price movements of the activity.

Trading is essentially a form of gambling, though hopefully a more informed (and less random) than the type roll of a dice or the spin of a roulette wheel.

Investors generally rely on the fundamental choice of investments, ie look at the global and domestic economy, what is happening in a particular sector, and prospects for the activity in question. Traders do the same, but also rely on technical analysis (Chartism) that attempts to predict future price movements by looking at graphs or charts of historical prices. There is absolutely no logical reason this should work, but the graphs do not perhaps give an overview of market psychology, and above are followed by many and as such can become a kind of self-fulfilling prophecy. The analysis technique tends to be used for more) in the short term (day) trading and ii) the optimization of input and output (timing).

The key point is whether you are a trader or an investor. As we said investing is something that should be done by almost all, trade is not certain. If you decide to become an entrepreneur, make sure it is a conscious and informed. A lot of study loads, and to do paper trading (trading with virtual money rather than real - there are a lot of marketing firms out there that allow you to set up accounts of practice for this purpose). Find a system that works for you, and stick to it along with the risk and disciplined money management .......