InvestorQ : Any short term dealing in stocks is like trading, right?
Dawn Cherian made post

Any short term dealing in stocks is like trading, right?

Answer
image
3 years ago
Follow
That is correct! Trading does involve more frequent buying and selling of stock, commodities, currency pairs or other instruments. The goal here is to generate returns that outperform buy-and-hold investing. That rarely happens in practice because trading is known as a zero-sum game. While investors may be content with a 10 to 15% annual return, traders might seek a 10% return each month. Trading profits are generated by buying at a lower price and selling at a higher price within a relatively short period of time. The reverse is also true: trading profits are made by selling at a higher price and buying to cover at a lower price (known as "selling short") to profit in falling markets. Where buy-and-hold investors wait out less profitable positions, traders must make profits (or take losses) within a specified period of time, and often use a protective stop-loss order to automatically close out losing positions at a certain price level. Traders often employ technical analysis tools, such as moving averages and stochastic oscillators, to find high-probability trading setups.
1 Views