Investing is not Trading

Investing

Investing is something you do after complete and thorough evaluation and due diligence has been performed. You develop an opinion about the idea and then wager a portion of money to the long term hope of the asset increasing in value. The time frame is normally much longer than a trade.

Some of the things considered when investing are the balance sheet, debt, growth multiples,  earnings and its growth rate, safety, and more.  The time can be very considerable to properly vet a good investment.  After investing normally you are prepared to weather the good and the bad times and just hold the position no matter what unless something very fundamental changes in the business.

 

Trading

Trading is the exact opposite to the point that you do not even have to know what the company does or even if it is a good long term investment.  The trader also does not care if the stock or commodity even continues to got up in value.  That does not make trading easy to do, but also does not mean it has to be hard either.

The list of thing a trader can look at to find there next trade is endless but there is one common theme and that is, find the reason to take a positions make a targeted amount of money and get back out of the idea.  This also is normally followed with a speedy removal from the position in the event you picked the wrong loser.  The time held is normally much shorter time period than investing, and less concern is used if the company or commodity is doing well or not.