Trading vs Investing
I come from financial technology background specifically in payment domain. My trading journey begins four years. As a tech professional for many years, I’m always curious about business, economy and finance which are the other areas in the organization. While exploring, I chance upon trading/investing topics. Thanks to a friend who introduce this area of business to me, my trading/investing journey kick started.
Often times, trading and investment have become inextricably intertwined. But actually there are two different animals. Trading is a process of buying/selling of an asset class in a shorter period ranging from seconds to months. You assess the risk, rewards, cost and benefits of the deal and commit to it.
For eg. You run a supermarket. You found a new product (miracle anti-aging apple juice), so you see the potential and try selling small quantity in your store. If the result is good, then only your consider the long term plan. Let say the cost is 1k and projected rewards is 2k, based upon the usual traffic in the supermarket. The risk and rewards is 1k:2k, which is a one to two ratio. Do you want to take this trade ? It’s a short term thing.
On the other hand, investing is on longer time frame. Let say, a property agent propose to you a new project, sustainable green living with high tech township development nearby. Upon assessment, the return on investment is a promising. You could make X% profit in N years. Do you want to commit to this deal ? It will be either asset or liability in the future.
Alright, I hope this short explanation help you understand the difference better. Good luck in your journey.
P/S: gentle reminder that trading/investing is NOT get-rich-fast programme. Do your research and understand what you are committing to.