There are many differences between day trading and investing. Day traders aim to make small profits many times by buying large numbers of shares and selling them within short periods of time to profit from small same day movements. Day traders can make several trades in one day and even hold stocks for a few hours or minutes before they sell them back.
Day trading is more like speculating it is not investing. Some say that day trading is like gambling in some ways but I disagree. It doesn't offer the possible security investing can offer but it is far from gambling. Day traders analyze what is going on. They educate themselves about a specific company and arm themselves with statistical analysis.
Most stock prices fluctuate from day to day from hour to hour. Their volatility is more like a rule in markets across the globe. There are many factors that determine the fluctuations in the prices of a stock. It doesn't matter if the market is calm or not if people are buying or selling stock prices will fluctuate. It is these daily small fluctuations that the day trader depends on to make a profit.
While a day trader is looking for relatively small returns real investors are in it for the long run and they are looking for much larger price fluctuations in stock. Investors research and buy so that their return is preferably higher than what they would get if they save their money in the bank also taking inflation in consideration.
If you are thinking about playing some money in the stock market then you should be aware of the potential risks. You wont become an investor or a day trader overnight. The idea that practice makes perfect applies to both investing and day trading.
The biggest difference between a day trader and an investor has to do with time. Investors generally hold stock and assets much longer than the average day trader. Overall there is no consensus on which of the two methods generates the most returns.
Taking the time and learning about both investing and day trading will place you in a better position when the time comes to decide which method you are going to use. Learning what is involved in these processes will place you in a better position when making investment choices.
Day trading is more like speculating it is not investing. Some say that day trading is like gambling in some ways but I disagree. It doesn't offer the possible security investing can offer but it is far from gambling. Day traders analyze what is going on. They educate themselves about a specific company and arm themselves with statistical analysis.
Most stock prices fluctuate from day to day from hour to hour. Their volatility is more like a rule in markets across the globe. There are many factors that determine the fluctuations in the prices of a stock. It doesn't matter if the market is calm or not if people are buying or selling stock prices will fluctuate. It is these daily small fluctuations that the day trader depends on to make a profit.
While a day trader is looking for relatively small returns real investors are in it for the long run and they are looking for much larger price fluctuations in stock. Investors research and buy so that their return is preferably higher than what they would get if they save their money in the bank also taking inflation in consideration.
If you are thinking about playing some money in the stock market then you should be aware of the potential risks. You wont become an investor or a day trader overnight. The idea that practice makes perfect applies to both investing and day trading.
The biggest difference between a day trader and an investor has to do with time. Investors generally hold stock and assets much longer than the average day trader. Overall there is no consensus on which of the two methods generates the most returns.
Taking the time and learning about both investing and day trading will place you in a better position when the time comes to decide which method you are going to use. Learning what is involved in these processes will place you in a better position when making investment choices.
About the Author:
The best thing you can do before you start investing is to talk to an Investment Advisor. You need to find a professional in your city though. If you live in Toronto then you should find an Investment Advisor Toronto.
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