investing vs trading
TRANSCRIPT
The Academy of Financial Trading
Investing Vs. Trading
Stop losses explained
Any Advice or information provided by the Academy of Financial Trading is General Advice Only - It
does not take into account your personal circumstances, please do not trade or invest based solely
on this information. By viewing any material provided by the Academy of Financial Trading or using
any information or tools you agree that this is general educational material and you will not hold any
person or entity responsible for loss or damages resulting from the content or general advice provided
here by The Academy of Financial Trading, its employees, directors or fellow members. Futures,
Contracts for Difference (CFDs), Options, and spot currency trading have large potential rewards, but
also large potential risks. You must be aware of the risks and be willing to accept them in order to
invest in CFDs and leveraged forex markets. Don't trade with money you can't afford to lose. No
representation is being made that any account will or is likely to achieve profits or losses similar to
those discussed in any material provided by the Academy of Financial Trading. The past performance
of any trading system or methodology is not necessarily indicative of future results.
Risk Warning
What exactly is meant by Investing?
Investing is more common than trading for most participants in financial markets – we feel this is because it is more palatable
Investing Vs. Trading explained
Investing vs. Trading
It is a method of gaining from or capitalising on a rise in price or value of a given asset class
Most Investors use stocks – this is largely due to their capacity to increase steadily and gradually over time
It can be felt to be simpler in concept and hence is favoured by most. But we feel this needn't be the case if one is open to a comprehensive education
Investing Vs. Trading
What are the pros to investing?
Less management – less administration, easier to gauge performance with little work
Can be seen as a guaranteed way to earn in the public mind
Most any potential investor is familiar with the factors that may cause a company’s stock to grow in price – sales results, P/E ratios, etc.
Investing Vs. Trading explained
Trading – capturing all movements, increases or decreases!
Trading can capture all price movements - rising prices or falling prices
We believe this is a more realistic approach given that prices will not always rise
A trader has thus more opportunities with time
Investing Vs. Trading
Traders capture both upward or increasing price movements and downward or decreasing price movements! Which is best?
Investing Vs. Trading explained
Investing Vs. Trading
The Conclusion and Comparison
An investor will typically buy a small lot size or volume of the market he is speculating upon as he is sure that the price increase can justify the same
He believes that the price could increase over time by levels of over 100%
What if this doesn’t come to pass? Have we missed other opportunities?
The trader capitalises and exploits both the rise and fall of price – he wins either way with a proven system
As such, he sees more opportunities than the investor per time.
He can also exploit less classical markets like currency pairs, commodities and metals which can be tougher to analyse using classical investing techniques
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