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  • Trading vs. Investing

    There are only two approaches to financial markets, trading, and investing. If you're new to the world of Wall Street you may be wondering which route is the best to take. There have been numerous success stories of people who used both approaches. Warren Buffet and Jim Rogers, and George Soros are all investors. Paul Tudor Jones, Timothy Sykes, and Marty Schwartz are all traders. In this article I will break down each approach and discuss some of the pros and cons of each. Lets's start with a basic breakdown of each one.


    Traders: Wall Street traders look to make their profits in very short periods of time. Usually in under two weeks.

    Investors: Investors, on the other hand, are willing to hold an investment as long as it continues to be a prosperous and viable investment. This could be years and even decades.








    Investing

    When I first delved into the stock market I was primarily an investor. I had no idea what I was doing of course but I was definitely holding on to stocks for a lot longer than a trader would. I think one of the first stocks I bought was a company that made slot machines for casinos. It was purely based off fundamental analysis as I had no idea how to analyze stocks technically. That stock along with the other two or three I bought after it went nowhere. After those attempts I realized I was more bored than anything and overly frustrated with seeing no results. That's when I started to lean towards trading when I realized it was a lot faster.

    I will say that investing requires a lot less market timing and that you can get into a stock at a bad time and always reason that you are a long term investor looking for the big move anyway. Also, as much as I hate cost averaging I would much rather do it with a long term investment than in a trade.


    Trading

    After some basic research into stock trading, I bought a pharmaceutical company and held it for about two weeks. I made $188 and never looked back. I rather enjoyed being able to get into a stock and back out in a relatively short amount of time. The profit wasn't much but I was on my way. I will say that trading is an endeavor that should only be tackled seriously once you have a significant sized account $25-50K minimum. Trading with less than that is of course possible but you will have a long road ahead of you if your goal is to build wealth. I as well as my mentor didn't build wealth from trading a couple of grand up into a million-dollar account. That's just unrealistic. It has been done before but don't get your hopes up too high. Try instead to build a sizeable nest egg in other areas of your life then use the proceeds of those ventures to speculate in the markets.


    Investing is no better than trading and trading is no better than investing but you should mainly lean towards the one that fits your personality when starting out. Here are some guidelines you could use to determine which route to go:


    If you are starting with less than $5000 - INVESTING
    If you are an impatient person - TRADING
    If you are looking to make a living - TRADING
    If you are under the age of 30 - EITHER...you have time to figure out your preferred method before deciding fully on one or the other




    As you become more versed in your chosen approach it's ok to even employ both methods. I have been trading and investing for years and have learned to balance both as a complete money-making strategy. That's why this site offers a stock picking service for traders and one for investors. Both are run independently by the owner of Wall Street Forum.

    In conclusion, we're all here to turn a profit. We all want to buy low and sell high(longs) or sell high and buy low (shorts). As long as your account grows you are on the right track.
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    "Step into the arena and hold on to your hat. Don't get discouraged if you don't make 8 trillion dollars in your first month. Trading is not a get rich quick scheme. Realize that trading is a skill and just like any other skill it takes time to learn. Have convictions in your decisions in life and trading. Ignore the comments and "advice" of those that have never traded a day in their life."

    Good KARMA and positive energy abound.


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  • #2
    My 2 cents...I love both methods. They both feed both sides of my personality. I like trading because it gives me a quick infusion of cash and let's be honest here, an adrenaline rush.

    I like investing because it cuts out a lot of the noise of the markets. I tend to not worry as much over my long term positions because why bother? A lot of my long term stocks tend to float along like a guy on a lazy river then eventually get where I want them to go anyway. I've seen it time and time again on countless stocks.

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    • #3
      Trading > Investing

      i'm a forex trader so investing isn't really a thing for us.

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