Trading Vs Investing

Trading and investing have many similarities but also some very subtle and nuanced differences.  The most important distinction would be timeframe.  An investor's timeline is probably far longer than a trader, who is really more in tune to the day to day market action.  That's not to say an investor cares little about the daily market movements.  Big surges in volatility, which tend to be temporary offer good chances for an investor to scoop up bargains.

But is one better than the other?  I guess it all depends on your goals.  An investor may see their returns more in line with the market, a very slow and steady progression towards wealth.  The long term investor has proven to be the best place to build wealth in the stock market.  Over many years an investor with a steady diet of contributions to investment, whether it's a retirement account or other has often found themselves sitting on a large pile at retirement age.  It's been proven over time to be the best method.

Yet, let's not put down a trader's approach just yet. Traders are keenly aware of the current happenings around markets and are wise to embrace volatility.  Investors wait for moments to dive in, while traders take advantage of these occurrences with regularity, often daily or weekly.  Investors will use big moves in volatility to add positions, traders may buy/sell constantly during bouts of volatility.  

Over time, a trader will have far more transactions than an investor, and overall results are likely to be quite different.  But traders can use volatile markets to gain the alpha needed to beat the indices, especially in a stock-picking environment.

In the end, trading this market requires the daily attention to movement, detail, and emotions.  Investors are looking for the best opportunity to gather more shares of companies that were pitched to the side of the road.  Both approaches can win over time.