The classic difference between investing and trading is as follows. According to Investopedia, investors seek larger returns over an extended period of time through buying and holding. Traders, on the other hand, take advantage of both falling and rising markets to exit and enter positions over a shorter period of time taking smaller or more frequent profits.
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Trading, in my opinion, appears a more realistic approach to life in general. At the beginning of the day, I know what my income needs are for the day. I provide services or sell goods in exchange for the “money” I need in order to purchase food, shelter, health services, etc. At the end of the day, it is about generating the profits that allow her to make life purchases.
Granted, a trader is typically not in possession of the asset she is trading. Rather, she may be trading a claim on an asset found in an account. Most of us have to wait to the end of the month to claim our payout in salary versus the trader.
And to take advantage of the benefits of trade, we have to wait to accumulate sufficient capital so that we are in a position to trade an amount that we don’t mind losing.
As for the time horizon, this may sound cynical, but the longer you hold a claim on assets as an investment, does this not give your asset manager more opportunity to hypothecate (use as collateral) your investment account? And why not be involved in the management of your money as a trader versus an investor?
Alton Drew
19 July 2024
Disclaimer: This post is not intended as investment or trading advice. I am just sharing my personal thoughts and investment/trading journey. Please consult an investment advisor before investing or trading.
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Lawyers Write the Bets. Bankers Sell the Bets. 