What’s the difference between Cryptocurrency Trading adn Investing?
In the financial markets, investors and traders both aim to generate profits. Although they share the same goal, their methods to achieve it differ greatly.
An investor typically hopes to generate a return over the long term – for example, over a decade or more. Since investors typically have a longer investment horizon, their targeted returns tend to be larger as well.
Meanwhile, traders attempt to capitalize on the turbulence of the market. In addition to entering and exiting positions frequently, they may seek smaller returns with each trade (since they are often entering multiple trades).
Which one do you think is better? Which one is more suitable for you? That’s for you to decide. You can start educating yourself about the markets, and then learn by doing. Over time, you’ll be able to determine which one suits better your financial goals, personality, and trading profile.
| Trading | Investing |
|---|---|
| Period | |
| Investing in stocks or crypto for a short period of time is called trading. It could be for a week or even every day! Stocks are held by traders until they perform well, whereas investing involves holding stocks for a longer period of time. | Many investors invest for several years, even a decade or more. In the long run investing approach, short term fluctuations in the market are insignificant. |
| Capital Growth | |
| Stock market traders keep an eye on stock price movements. A rise in stock prices may prompt traders to sell the stocks. A trader’s skill is to be able to time the market correctly | By holding quality stocks over time, investors create wealth by compounding interest and dividends. |
| Risk | |
| Short-term trading, in contrast, carries a greater risk of loss and higher potential return due to the possibility of price changes | Investing is an art that takes time to master. Short-term returns may be lower, but compounding interest and dividends could produce higher returns over the long term. |
| Art Vs. Skill | |
| Trading is like a one-day cricket match, while investing is like a test match. In a one-day match, one can expect skillful players to hit fours and sixes to score higher. Traders are experienced, technical individuals who time the market and learn market trends to hit higher profits. There is a psychological component to it. | The study of stocks is an important part of the investment process. It is also important to learn business fundamentals and to commit to staying invested for a long time. An organization’s philosophy determines how it operates. |
| The ones who do | |
| Stocks are bought by investors for a short period of time. The goal is to make the highest profits in the market by buying and selling rapidly. A missed opportunity can result in a loss. On the basis of their current performance, the companies are examined in order to reach the higher price and profit levels short term. | Trends are not important to investors because they focus on values. Keeping tabs on the stocks they hold for longer periods of time is what they do. Stocks are watched patiently until they reach their potential. Achieving your financial goals is the ultimate sign of success! |
| Trading | Investing |
