Investing and trading are two very diverse methods of earning profits in the fiscal markets. The aim of investing is to develop wealth in an extended time period via purchase and holding of shares, mutual funds, bonds and other investment tools.
Very often investors increase their profit margins via reinvestment of profits. The period of investment varies from a few years to decades, depending on the rates of interest, dividend and market situation.
In a case of market fluctuation, investors survive the downtrend hoping share prices will bounce back and they will be able to cover the losses during the dull phase. Investors are usually more apprehensive with market basics such as price, income ratios, and forecasts by market experts.
On the other hand, trading is related to the recurrent purchase and sale of shares, goods, and commodities, and other tools, with the aim of producing returns that better or surpass purchase and hold investing.
While investors may be satisfied with an annual return of 10 to 15%, traders may look for a monthly return of 10%. Trading profits are created by buying at a low price and selling at a high price within a relatively short time period.
The reverse is also true- trading profits are earned by selling at a higher price and purchasing for covering at a lower price to make a profit in slumping markets.