What is the difference between trading and investing in the stock market?

Asked by Michael

3 Answers

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Answered by Alex Bentley, Financial AdviserPRO+ in Pacific Palisades, CA
Trading is more short-term and investing is more long-term. An example of trading would be buying and selling a stock in a day. An example of investing would be buying and holding a mutual fund or stock for a long period of time. | 09.26.13 @ 22:38
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 20:04
Answered by Tracy Scott Burke, CFP®, ChFC® in Harrisburg, PA
I agree with Alex and would point out that trading is more speculative (i.e. - trying to make a profit on shorter-term market directions) while investing is for the long-haul and is what can build wealth for folks over time. | 09.27.13 @ 12:46
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 20:04
Answered by Dave Bradley, Investment Manager (Financial Advisor) in North Charleston, SC
Hi Michael,

Most folks will answer this one by using a time constraint.

Digging deeper into this on an individual level:
Trading is like a hobby-as in swapping baseball cards or marbles for some type of advantage
Investing is a way of life like investing in yourself.

As an Investment Manager, we also use a trading strategy as an investment strategy by buying the same company at a low price, selling it at a higher price. Then, repeating this over a long period. To do this requires discipline and a great set of rules (checklist). Most importantly, one needs the ability to understand the intrinsic value of the company you are buying and the limitations of your human ability by using a huge margin of safety.

Feel free to send me a message to discuss further. No obligation.

It's not what you make, It's what you keep that determines your lifestyle. | 03.27.16 @ 01:00
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 20:04
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Answered by

Alex Bentley
Alex Bentley, Financial AdviserPRO+ in Pacific Palisades, CA