What is the difference between traders and investors?

The difference between traders and investors? Simple, traders buy stock for the short term and investors buy stock for the long term. Broadly speaking, there are four main types of trading, day trading, swing trading, position trading and investing.

Day trading is when shares are bought and sold within 1 day, this can produce big profits but is acknowledged as one the riskiest forms of trading shares.

Swing Trading is when shares are kept between 2-14 days and the idea is to follow the current upward or downward trend, like day trading this can be very profitable.

Position trading is where shares are kept for 1-6 months, this style is used to follow the long term trends of stocks. This style is often used by people in full time jobs who can’t devote regular time to managing their stock market portfolio.

Investing is where shares are kept for 6 months or more, this style often involves investing in young or highly profitable companies in order to capture their growth with the investment or to receive their dividends.

It is important to determine what type of trader you are in order to select strategies that suit your style of trading. Stock market courses will help you develop trading strategies.

The amount of time you have to give to trading shares will often determine your style of trading. For example if you want to trade shares and still work full time then you will not be suited to day trading.