What is the difference between trading and investing?

There are two main differences between trading and investing. The first is durationand the second is portfolio activities.

Investing versus trading

When investing, people buy and hold their assets for a long period of time (several years or sometimes even decades).

When trading, people make more frequent transactions (buy and sell) and use price changes (or fluctuations) to their advantage. Their goal is to generate profits faster and outperform buy and hold strategies.

Cryptocurrency markets are very volatileand the value of your trading assets can drop very quickly. Investors don't worry too much about daily losses or gains... Their goal is to increase their wealth over a long period of time. They usually also periodically contribute new capital to your investment portfolioif they see they see a large drop in value as they expect the price to jump and any losses will eventually be recouped.

As for traders, they care short-term price changes... Trading profits are generated based on buying at low prices and selling at high prices within a relatively short period of time. Day traders buy and sell many assets multiple times a day. Please note that such actions are performed trading botswhere day traders are in charge of setting up a trading strategy, and software takes care of the actual trades on the exchanges.

Depending on their style, traders can be divided into these four categories:

- Positional trader: This includes people who invest for a long period of time with the expectation that the value of the assets will increase. (usually several months)

- Medium term trader: makes small gains in short-term trends and cuts losses faster. Positions are usually held from several days to a couple of weeks.

- Day trader: This is a trader who executes a large volume of trades for profit during the day. Positions are held only during the day.

- Scalper: strives to get as much profit as possible. Positions are held for a few seconds or minutes.

What's the best strategy for you?

For small investors and people who have little free time, investing is more suitable than trading, since trading involves almost constant tracking of trading assets. Trading also requires more technical (and programming skills) to be profitable in the long run. If you are interested in trading, we invite you to read our 5 basic rules for successful cryptocurrency trading.

Like this article? Share with friends:
Torrent4you

;-) :| :x : Twisted: : Smile: : Shock: : sad: : roll: : Razz: : Oops: :o : Mrgreen: : Lol: : Idea: : Grin: : Evil: : Cry: : Cool: : Arrow: : ???: :?: :!: