The Difference between Trading and Investing in Stocks
Stocks are a pretty wonderful thing, but they’re also a very confusing thing. Everyone knows that one can “play” the stock market, and that if one does so successfully, one might very well earn oneself a decent little fortune. You’re also probably aware as stocks being the basic unit of ownership for a publicly-traded company. But there’s a lot more to it than those things that the casual observer might glean from simply overhearing conversations about the stock exchange and how it works. There are all sorts of different ways that an individual can interact with and make money from the stock exchange, and a lot of times retiring to simply sit back and play the stock market can be a great idea (when enough of a fortune has been amassed ahead of time, of course, that you don’t have to worry about working to sustain yourself). The stock market is a great way to make yourself some money, and the two main ways to do it are investing and trading in your stocks. There’s a difference between the two, even though a lot of us have heard the two terms for most of our lives without actually pausing to consider what the difference between the two might be, let alone that one even exists. We’ll talk about what it means to invest, versus what it means to trade, and how the two of those things can help you bring in some extra cash alongside your normal income.
Investing and trading, in all honesty, are just about as different as they sound, and if you think you’ve got an idea as to what the main difference is between the two, you’re probably right. Investing, just as the term suggests, is a bit more of a long-term purchase. When you invest in stock, what you’re really doing is investing in the company and its future prospects. Larger companies that are publicly owned distribute this ownership via stocks. Whoever has the most of them owns the most of the company. These stocks have a worth that varies with the demand that gets put upon them — this is based upon the company’s performance and how the market perceives it. When you invest in a company, you purchase its stocks on the long-term, and might plan on selling them off at some point in the near future. Investing, however, is typically done with the intention of actually owning a stake in the company, and is more of a long-term objective.
Stocks are a bit different when you’re trading them, however, as this is a more fast-paced method that is more directly predicated upon making some money. When you’re a stock trader, you buy stocks so that you can hopefully sell them when the time is right. A period of a couple of months or so is usually the time frame involved in trading stocks, and there’s a bit more strategy involved in finding the best time to trade for the highest value. Learning at a site like http://www.tradingacademy.com is a great way to familiarize yourself with the ins and outs of trading stocks. Whether you’re a trader or investor, the stock exchange is a great way to make extra money.
