What is the difference between day trading and long-term investments?

Asked 4 years ago

Also, what are the advantages and disadvantages of each one?

Filip Dimkovski

Sunday, April 11, 2021

There are certain pros and cons of each one, I'll try to explain as precisely as I can.

Unlike long-term stock trading, day trading is a lot more thrilling and fun. With short-term trading, you buy an asset and sell it within a relatively short time (could be anywhere from a couple of minutes to 2-3 days). The short-term profits you can get from it can be crazy, with some traders getting a 500% return within a month. It's also a lot more accessible & easier to do. On the other hand, it's also a lot more risky and requires more education & training. The same way you could get a 500% return, you could also lose all of money within a week if you're not careful. It also requires a lot more discipline and decisiveness.

When considering long-term trading, remember that it's a lot safer. Purchasing an asset (ex. Microsoft stock) and holding it for at least 6 months means you're already long-term investing. You don't need as much education, and following the market trend will usually make you profitable (not by much though). As the name suggests, it's a lot better in the long run, but you can forget "getting rich quick" schemes. Getting a 5% yearly return is achievable and not very hard to do.

My piece of advice would be getting into both if your schedule allows it. Try both strategies out and see which one suits you better.





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