There will come a time where you will think about greed. Greed is good, but only for the smart. If you want to make big money in the stock market you have to be smart. Knowing the difference between stock trading and stock investing is a must.
Stock Trading is the process of going in and out of a security for the purpose of making profit. The time horizon of a stock trader is from minutes to a few days. They do not care about the company's underlying fundamentals, they only care about its volatility and movement. Most stock traders make use of charting or technical analysis to guide their trades. They are the hares in the "turtle and the hare" children story.
Stock investing is the process of buying a share of a company for the purpose of holding it indefinitely until their reason for buying becomes invalid. Stock investors look for the long term when they buy the stock. They don't care about the volatility of the market, they only care about the company's underlying management, finances and prospects of expansion. They are in it for the long term or even for a lifetime. Unlike trading, stock investors view the stock as a part ownership of the business. They are the turtles.
There are pros and cons in being a stock trader or investor. For example, a stock trader will make money faster than a stock investor. Because they go in and out of the trade, they make profits easily and fast. While investors will only profit once they sell, and they seem to hold on to a stock at very long time, they will only realize the profits later.
In terms of expenses, stock traders incur lots of expenses. Because each trade will mean commissions and taxes, the profits seem to diminish as long as they continue to trade. While investors gets tax breaks for holding it for a long time, they also minimize the expenses because they get to receive dividends from the company.
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