Trading Vs. Investing – What's right for you?

A strange sense of mystery is something that can often be felt when talking with people about stocks, and that's without mentioning Futures or the Forex market. Well, let me tell you, trading the financial markets can be very rewarding both financially and personally.

It is so liberating just to know that you have taken (at least some) control of your financial future, and that's even without taking to consideration the short term financial benefits and all the thing you could do with a little of extra money in your pocket.

There are two main schools to consider when approaching the financial markets: Investing and Trading. While a trader will buy look to buy a financial asset (bonds,stocks, options, futures, currencies, ect) in order to sell when the price rises. Trading usually refers to holding financial assets for a relatively short period of time. Time frames can change from trader to trader. A trade can be buying and selling in a few weeks period, few days, hours or even minuets.
Investing on the other hand, usually refers to holding a financial asset for a long period of time in order for it to gain value. A long term investor could ignore short term movements of price that a trader might like to take advantage.

As there are two main schools for handling the market there are two main approaches to analyzing it and the financial assets. One analyzing method is usually referred to as Fundamental Analysis. Fundamental analyst considers mainly economical data such as business environment, macro analysis, annual reports with balance sheets, cash flows and profit statements.

The second method is called Technical Analysis. A technical analyst makes his decisions based on price movement, price patterns and various statistical tools, he gets his data from price charts. Usually, technical analysis is more associated with trading than with investing, while fundamental analysis usually comes to mind when talking about investing for long periods of time.

As I wrote at the beginning of the article trading (or investing for that matter) can be very satisfying both personally and financially, BUT, and that's a big but, you have to take small steps when begging to trade (or invest) starting with learning as much as you can about it, and the reason is very simple, as money can be made it can be lost, the educated and the experienced is more likely to succeed.

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