Trading Vs Investing Differences and Similarities

Trading vs investing is an age-old comparison that is important to understand.

At CAPEX, we’re committed to providing you with access to educational guides which outline key terminologies that will improve your online trading ability and approach. Read on to find out precisely what is meant when we refer to trading and/or investing.

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Trading vs investing

Trading explained

The market for online trading has grown immensely in the last decade. The internet has facilitated huge growth within the industry as more and more trading platforms have emerged. But, what is trading? How does one differentiate between trading vs investing? At CAPEX, we aim to provide you with comprehensive coverage of all relevant terminology.

You’ll find that trading refers to an activity where the frequency of buying and selling is a lot higher. Transactions take place on a continuous basis and include buying and selling of securities. The idea behind trading is to generate consistent returns that preferably outperform that of more long-term investments. Thus, individuals who engage in trading aim to realise positive returns over a shorter period of time.

Investing explained

When we consider that trading may well take place over a shorter period of time in terms of potential return, investing aims at accumulating wealth in the long term. Investors are less concerned about quick returns and aim to buy and hold securities for an extended period of time. Investing focuses on long term growth by taking advantage of interest rates, dividends, and such throughout the process.

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Similarities of trading and investing

Both aim at realising returns in financial markets

When it comes to assessing the key similarities of trading vs investing, the main factor is that both activities are focused within financial markets. Moreover, both trading vs investing aim to realise returns within these markets. However, it is the approach which tends to differ significantly. You’ll come to find that the stock market is a haven to various individuals – none more so than both traders and investors.

It’s important to use a plan or strategy

It doesn’t matter whether you are looking to trade or invest, a plan of action or strategic approach is necessary. Without this, you’ll come up empty for the most part. Traders require short term strategies that assess stock indicators while investors utilise long term plans which assess the viability of the companies whose stocks are being bought. Either way, having a thought-out approach is a key similarity in both trading vs investing.

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Differences between trading and investing

Time periods tend to differ

You’ll come to find that with trading vs investing the time period will differ across the board. When it comes to trading, individuals engage in trading in the short term. This isn’t to say that they only do it for a small amount of time. However, the short term returns are the order of business. On the other hand, investing requires a far more long-term approach. This requires patience and commitment to holding investments for years on end as opposed to one day or one week.

Trading may well prove riskier

When it comes to trading vs investing, one may prove to be more risky than the other. Both activities mean that you will have to risk your capital with no sure sign that you will get all, or more, of your money back. However, investing takes a more balanced approach. This means that the overall risk may be lower but so will short term returns. In the long run, it’s still possible to realise a decent return. Trading takes place over the short term and can involve trading more volatile stocks which are riskier. The fact that price fluctuations are more erratic, the possibility of higher returns in the short term are prevalent. The higher the risk, the higher the reward as the saying goes. It’s important to factor in associated risk when trading and investing but especially the former.

Different skills and know-how

Traders and investors both utilise  their knowledge and understanding of markets when partaking in their given approach. However, trading vs investing requires different skill sets. One way to look at it is that traders analyse the psychological side of financial markets. They aim to apply technical skills and insights so as to capitalise on market movements as quickly and swiftly as possible. On the other end of the spectrum, investors are more concerned about the philosophical approach that the underlying companies have adopted so as to assess which stocks and instruments will yield consistent returns over a longer period of time.

 

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Using the CAPEX platform for your trading/investing needs

When it comes to trading or investing, you’ll come to find that the CAPEX platform is where you should find yourself. We have incorporated a wide range of indicators, tools, trading signals and features on our comprehensive trading platform. This enables you to analyse market trends and assess potential outcomes with integrated tools that provide complete oversight. Assessing markets has never been easier. You’ll be able to take part in a wide number of trades with real-time quotes and lightning speed execution.

Utilise the CAPEX trading options

You’ll come to find that you can trade across eight different asset classes. Included in this list is the option of trading Forex, indices, bonds, ETFs, commodities, blends, cryptocurrency, and stocks. All of which are traded as contracts for difference. Thus, you won’t need to worry about actually buying the underlying asset. You can simply trade by way of price speculation. You’ll find that it’s possible to access over 2,100 instruments when you create a CAPEX account.

Have the backing of CAPEX support and education

You’ll have access to markets 24/5. However, this doesn’t come without its own complications. Trading rigorously may well mean that you encounter issues along the way. At CAPEX, we have ensured that our support team is on standby whenever you require assistance. Plus, we’ve released a wide range of helpful educational resources which will get you up to speed whenever you feel the need to jumpstart your memory.

Conclusion – Trade CFDs at CAPEX

Our latest coverage of trading vs investing should have you leaning one way or another. However, we’re confident that you may well be interested in trading online as you find yourself reading this guide. At CAPEX, we have a comprehensive trading platform where you can trade over 2,100 CFD instruments. The potential upside in the short term is an appealing draw for many. Sign up today and you’ll have all the subsequent services on offer that make for an informative and reliable trading experience.

Trading vs Investing – FAQ

❓What are the key differences between trading vs investing?
🔎How do I characterize a trading platform?
🔐Is trading or investing more complex?
🤔Do I require a lot of capital to start investing?
📊What are the best instruments to trade online?