Trading vs Investing - What is the Difference Between a Trader and an Investor?
What are the key differences between them and what do you see yourself being, a trader? an investor? or both?
Time frame Trading vs Investing
First, as it's the most important factor is the time frame in which an asset is bought or sold.
As a trader, you will only hold the asset of a short amount of time. The goal is to buy the asset at a low price to then sell at a higher price. This is referred to as taking a "long position". Cryptocurrencies have become popular to trade as their volatility creates never-ending opportunities to buy and sell at a profit or potentially a loss. Trading assets in a short time frame allows you to gain a profit for an asset in usually, a much quicker time frame than investing.
Investing is characterised as holding and accumulating assets over a longer period. This could be years, decades. The benefit of investing, accumulating and holding various assets over a longer period of times has many benefits relating to minimizing risk, smoothing out volatility, tax implications, dividends benefits, bring down average entry price, stress, time management and opportunity mitigation to mention a few. Investing can be done by anyone, new or experienced and is a life skill everyone should learn.
"It's just as profitable to spend time in the market, rather than timing the market".
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