Factorsĭays or weeks at most – the longer the hold, the greater the risk In reality, traders can exist anywhere between these two extremes – and usually do. And remember, we are looking at opposite ends of a spectrum. Let’s look at some of the key differences between investing and day trading. Main Differences Between Investing and Trading She buys shares before the report and sells them later that day after the announcement. She has disposable income to open an online brokerage account.Īfter some research and analysis, she identifies a stock she expects will rise following an earnings report. In practice, you are betting that stock prices will shift in your favor on any given day.įor example, consider a single person with a high salary. You try to profit by buying and selling stocks based on small market fluctuations. Let’s take a look at investing and day trading in more detail.ĭay trading is a short-term strategy with high risk and high reward. What Is Investing and Day Tradingīefore choosing a strategy, we need to understand some basic concepts. This article will break down the concepts of investing and day trading, analyze the differences, and offer some recommendations. Are you an investor lying back with a drink in your hand? Or, are you a day trader catching waves and riding the adrenaline?Īnswering that question requires you to understand some things about the market and yourself. So, if you plan to risk real money in the stock market, you first need to decide which strategy you will use. Both people are having a great day at the beach – but their experiences are very different. Another person is just chilling on the beach, drink in hand, watching the tide roll in. One person is surfing the massive breakers – a thrilling, dangerous, intense experience. Long-term investing and day trading have similar goals but take different approaches. Both want to make money in the stock market – they’re just on opposite ends of the risk/reward spectrum.
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