The Difference Between A Day Trader And An Investor
Although many people seem to confuse day trading with investing these two are not the same. Whereas investing is done within long periods of time day trades usually buy and sell stock in much shorter time intervals. Even though it all depends on the stock a day trader does not invest in a company. They buy and sell stock with the intent of making money based on the small fluctuation in price.
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.
Stock prices fluctuate constantly. Depending on how many people buy or sell a stock then the price changes. Day traders rely on this fact to make money. When a day trader has information that says a stock price will rise in the near future they will make a purchase and hold until right before the prices starts dropping again. 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 primary difference between an investor and a day trader is time and percentages. These two terms shouldn't be confused because they are used to describe two different techniques.
Educating yourself about the techniques involved in day trading and investing is very important if you are starting out. You need to be able to spend some time and learn what is involved in the two processes. - 23311
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.
Stock prices fluctuate constantly. Depending on how many people buy or sell a stock then the price changes. Day traders rely on this fact to make money. When a day trader has information that says a stock price will rise in the near future they will make a purchase and hold until right before the prices starts dropping again. 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 primary difference between an investor and a day trader is time and percentages. These two terms shouldn't be confused because they are used to describe two different techniques.
Educating yourself about the techniques involved in day trading and investing is very important if you are starting out. You need to be able to spend some time and learn what is involved in the two processes. - 23311
About the Author:
The best thing you can do before you start investing is to talk to an Investment Advisor. You need to locate someone in your area though. If you live in Toronto then you should locate an Investment Advisor Toronto.
posted by Mr. Forex at
6:21 AM
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