InvestingTrading

Investing VS. Trading

Mature/Elderly couple speaking to financial advisor

When it comes to buying up assets for the future, most people limit themselves to investment: purchasing something (often stocks and shares) and hoping that the value will go up over time. This is a long-term financial strategy, and it suits those who want to put aside a pot of money for the future.

Those more interested in short term gains might prefer to look at trading. Trading involves buying and then quickly selling assets – taking advantage or rising and falling markets to ‘buy low and sell high’. When we say ‘quickly’, this doesn’t necessarily mean that purchases are sold on the same day, week, or even month. However when compared to investment, there is a quick turnover of transactions. Typically you’ll make smaller returns on each sale, but the overall returns will be greater.

Stocks and shares

The obvious place to start for both investment and trading is with stocks and shares. Investing in stocks and shares is simple, and most banks offer packaged accounts that will help you to choose where to place your money.

Mobile phone with stocks and shares app

If you want to start trading then you’ll need to use an online broker. This is somebody who physically makes the trade for you, and may also be able to offer advice on how to use your money wisely.

Cryptocurrencies

Another great area for trading is cryptocurrency. As the cryptocurrency market is particularly volatile, there is a lot of money to be made for those who are able to buy and sell at the right time. Trading cryptocurrency typically means purchasing a currency such as Bitcoin and then waiting for the right moment to sell. Selling your currency relies on market interest: you need people who are willing to buy. Luckily, the UK currently has a vibrant and active cryptocurrency community. Buyers are never in short supply.

To get started with trading cryptocurrencies, it’s a good idea to use a tool such as Bitcoin Evolution, which will help you to pinpoint the best trading opportunities, and make it easier for you to buy and sell. Check out the bitcoin evolution official website to find out how it all works.

Pros and cons

To put it simply, investment is safer and easier but the returns from trading can be a lot bigger if you’re willing to put the work in. You need to be market savvy – understanding what you’re buying and when to sell – and you need to have some time put aside both for learning about financial trading and for actually making the trades.

There’s always risk attached to any kind of investment: your balance could go down as well as up. Over a long time, though, investment portfolios do tend to perform more or less as expected. When you start trading, on the other hand, you’re very much at the whim of the market.

That being said, it also offers a great adrenaline rush: many people find trading to be an enjoyable hobby. The most important thing to remember is to only use money that you can afford to lose. With that golden rule in mind, trading stocks, shares or cryptocurrencies can be a great way to make some extra cash.

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