Q&A: What is the difference between investing and trading/speculating?
Anne edited the following
Question: What is the difference between investing and trading/speculating?
I’m interested in stocks and want to just dip my toe into the water to see how it is. I’m not looking to make millions or thousands of dollars. 0 a month is more than enough. I was doing a research in stock market and there is an overwhelming amount of info out there. So I have a basic question?
What is the difference between investing and trading/speculating?
How do they each make profit and how long does it take to make a profit?
ANSWER:
Answer by Len
Investing calls for knowledge of equities considered for purchase. This requires strong awareness of balance sheet information and performance record for the better part of a couple of years.
Speculating is pretty much guessing, similar to how one bets on a horse or the hometown pride an joy when you root for your hoped-for winning team.
Trading refers to buying and/or selling stocks.
Bottom line:
Knowledge separates the winners from the losers for the most part. By all means,dip your toe in the water. If this work suits you and you can handle the risk, why not? Nobody can predict the future but you may do really well because this is something that intrigues you. I think nothing counts more than finding things that trigger your excitement.
Speculators make money when Lady Luck shines on them.
Stock traders make money when their educated hunches come through as evidenced by successful performance on the part of companies whose stock you own.
As a trader, I keep my finger on the time line in every holding in my portfolios in order to maximize earnings potentials. This keeps me hopping, always looking for something better that may translate into finding picks likely to mature before some others.
Len
Answer by Warren534_FuturesTrader
The way these terms are commonly used, there is no difference.
To me, an investment is when you establish or buy into a business in order to build it up and make it grow – something like a restaurant, retail store, etc.
When you buy a few hundred or thousand shares of a company on the stock exchange, this is trading / speculating. If you know a lot about the company, that’s nice, but it won’t really help you if the stock price is going down. People may call themselves “investors”, but really they are either traders with a long-term horizon, or are sitting on losing positions and don’t want to unload them.
Answer by EverReady
Investing is based on you committing your capital for realization of gains.. An example of an investor is Warren Buffett who invests his money in companies for a long time in order for his original capital to grow.. Think of it as a business.. If you bought into a coffee house and the sales were going down.. If you were an investor you would stick with it and wait it out.. If you are a speculator you would sell because the sales are going down. A speculator sells quickly and looks at charts for ins-and-outs.
Warren Buffett the worlds greatest investor has returned around 20% in his lifetime.. He has the most successful track record for returns. So in the end what i’m trying to say is you shouldn’t expect to double your money every year for the next 30 years..
Good luck..
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