Hey traders,
In this post, we will compare investing, trading and gambling.
šInvesting
Investing is the act of putting money in a financial market with the expectations of a long-term positive return.
The investing decisions are usually made using fundamental analysis.
The main goal of an investor is to predict the long-term market trends and benefit on them.
Professional investing also involves assets allocation and diversification aimed to hedge potential risks.
š±Trading
Trading is the process of selling and buying financial instruments expecting a short-term (occasionally, mid-term) profit.
The trading decisions are usually based on technical and fundamentals analysis.
The goal of a trader is to predict local price fluctuations and catch them.
Professional trading implies strict, rule-based actions following a trading plan.
š°Gambling
Gambling is the act of betting on a specific event with the expectations of winning some value.
Being completely luck-based, gambling usually involves get rich quick schemes and pursuit of easy money.
What differs professional trading and investing from gambling is the fact that professional trading / investing involves objective analysis and strict planning, while gambling remains purely intuition based.
Unfortunately, most of the market participants pretend that they trade and invest professionally while acting as gamblers in fact.
Remember that long-term, consistent profits can be achieved only with the plan. Your intuition may bring some short-term profits, but in a long-run it will most likely lead you to a bankruptcy.
