The difference between trading and investment

[Lembo69]

Let's first know what is trading and how many types it is

We almost all know that trading is a type of business. And there are 3 types of trading

• Crypto trading
• Forex trading
• Binary trading

Their work is the same but different sectors such as

Crypto trading, it is trading on digital currencies like Bitcoin, Ethereum, all digital currencies with the aim of making a profit, which is called trading in crypto

Forex trading, Forex trading is almost the same as crypto currency. But it is not traded on digital currencies. It is done on regional, international, or national currencies. In our Nigeria, on the naira

Binary trading, I will not call it easy, because it is very difficult, because of binary trading, many people consider trading as gambling. Binary trading is basically done on the rise and fall of the market, in a word, on the fluctuation of prices. It is very complicated and risky, so I would say it is better not to trade binary. However, those who are experienced in this subject can easily make good profits from it.

Before trading, you should definitely set a specific goal. And it is necessary to become proficient in trading with time.

Bitcoin investment, to invest, you do not have to learn so much like trading. Or even if you are not proficient, it is okay. You can compare investment with savings, and you can also compare it as an inflation protection system. If a person wants, he can start investing at any time, even if he is ignorant about Bitcoin, he can still start. Bitcoin investment also requires 3 things

• The will to invest
• Patience
• Money to after meeting all the needs.

It is better to start Bitcoin investment with small amounts, and that is through the DCA strategy. Basically, hedging and investing with a long-term mindset. Investing in Bitcoin is very easy and can be profitable if an investor makes a long-term sustainable investment. However, the longer you can hold your investment, the more profit you can make.

There is a big difference between trading and investing. Trading is more risky but not investing. This is because if an investor can invest for 4-10 years, then he may be able to make a large profit.

[Charles-Tim]

This is very wrong. Crypto and forex are just the market people are trading.

Types of trading
Scalping
Day trading
Swing trading
Long term position trading (which some people can say it is an investment, but not an investment as long as you use derivatives market for it. Although, it is debatable.

Different markets that people can trade
Bitcoin and other cryptocurrencies
Forex
Stocks
Commodities

Binary is not trading and some people can say it is more related to gambling.

There is a big difference between trading and investing. Trading is more risky but not investing. This is because if an investor can invest for 4-10 years, then he may be able to make a large profit.

It depends on what you invested on.

[Sammysmart001]

I love this. The true fact here is that if you know you are going for trading know that you are going for a short time , but if it investment it a long term.

Observation wea i get
1.Binary trading: This binary trading of a thing no be real trading, he they more of betting or would say it like betting. So personal I would advise for us to avoid this. Come to check self most country has band it.

2.Investing/Trading risk: when it come to investments in Bitcoin it less risky this because with your DCA well planned you don’t need to stress out with much thing any more. But for trading this have you to deal with market up and down and fees and also deals with ur emotions always.

You really said it all about the three things for investment, you are right on point.
 DCA they really save my ass allot for pump and dump well.

My Question for you is that are you into investment or you trade for self instead ?

[Charles-Tim]

Your 3 things for investing na correct: will, patience, and money wey you fit afford to lose. DCA they really save my ass allot for pump and dump well.

Just like I have posted above, it depends. If you invest on some assets, it can be of regrets regardless you NCA (naira cost average) or not.

Investing the amount of money that you can afford to lose, this is correct for trading, but not correct for investment. In investment, people use discretionary income as long as the asset you are investing on is a store of value and a hedge against inflation.

[Sammysmart001]

Your 3 things for investing na correct: will, patience, and money wey you fit afford to lose. DCA they really save my ass allot for pump and dump well.

Just like I have posted above, it depends. If you invest on some assets, it can be of regrets regardless you NCA (naira cost average) or not.

Investing the amount of money that you can afford to lose, this is correct for trading, but not correct for investment. In investment, people use discretionary income as long as the asset you are investing on is a store of value and a hedge against inflation.

Okey noted… i get the point now.
Trading it more of money that you can afford to loss. And going to investment it discretionary income, it has nothing to do with gambling/betting it more of preserving for long term profit.

Do now going to the three things it will be discretionary income, being patience and lastly a long term mindset to have. And DCA will keep one going consistently.
This nice just learnt new stuff today

[Rubuchi]

Your 3 things for investing na correct: will, patience, and money wey you fit afford to lose. DCA they really save my ass allot for pump and dump well.

Just like I have posted above, it depends. If you invest on some assets, it can be of regrets regardless you NCA (naira cost average) or not.

Investing the amount of money that you can afford to lose, this is correct for trading, but not correct for investment. In investment, people use discretionary income as long as the asset you are investing on is a store of value and a hedge against inflation.

you are right in your words and many of us are having this issues in trying to distinguish the thin line differences between trading and investment in bitcoin or crypto generally because even the said trading has what we call swing trading which can last for weeks despite it being a form of trading though I know no one will invest in bitcoin truly to last for just weeks. That won’t be called investment so I wish we can still school ourselves more on more information or those tiny details , I am pretty much sure it will highly beneficial to myself and others who are interested in learning new details from experienced people here.

[KawasakiNinja1_]

Okey noted… i get the point now.
Trading it more of money that you can afford to loss. And going to investment it discretionary income, it has nothing to do with gambling/betting it more of preserving for long term profit.

Do now going to the three things it will be discretionary income, being patience and lastly a long term mindset to have. And DCA will keep one going consistently.
This nice just learnt new stuff today

It seems that you have not understood the point well yet because trading and investing in crypto should be done with money that you have the ability to lose, in fact the main explanation of this is that the price of any token or Bitcoin in the cryptocurrency market can suddenly fall. However one thing to note is that trading is much riskier because it should be done after being full of knowledge but investing is something that can be done with some of your knowledge and some discretionary income, take note of these.

[Denziiii]

you are right in your words and many of us are having this issues in trying to distinguish the thin line differences between trading and investment in bitcoin or crypto generally because even the said trading has what we call swing trading which can last for weeks despite it being a form of trading though I know no one will invest in bitcoin truly to last for just weeks. That won’t be called investment so I wish we can still school ourselves more on more information or those tiny details , I am pretty much sure it will highly beneficial to myself and others who are interested in learning new details from experienced people here.

You made a very valid point. Many people mix up trading and investing because the line between them can sometimes look very thin. For example, swing trading may last for weeks or even months, but the mindset behind it is still very different from investing. Traders focus more on market movements and short-term opportunities, while investors focus on long-term value and accumulation.

When it comes to Bitcoin especially, true investment is usually tied to patience and a long-term outlook rather than short-term price action. This is why education is important. The more we learn those small details and differences, the easier it becomes to avoid mistakes and choose strategies that fit our goals. Continuous learning from experienced people here will definitely benefit both beginners and those already on the journey.

[Perfectbaby]

Your 3 things for investing na correct: will, patience, and money wey you fit afford to lose. DCA they really save my ass allot for pump and dump well.

Just like I have posted above, it depends. If you invest on some assets, it can be of regrets regardless you NCA (naira cost average) or not.

Investing the amount of money that you can afford to lose, this is correct for trading, but not correct for investment. In investment, people use discretionary income as long as the asset you are investing on is a store of value and a hedge against inflation.

Of course you are right and many people may seems not to understand how these two factors works, during investment whatever amount you used to invest on a reliable asset such as bitcoin or any other reputable coin would serve as an investment purpose while in trading they shouldn’t be that using an amount that is extremely higher than your risk level or to your tolerance capacity. When you do that you could find it extremely hard to recover because is trading and to what you lose can’t be that easily recover.

[Hypnotizer]

“Difference between trading and investment” in which context? You know trading and investment are things that are very broad but you didn’t specify in you topic title and in your post body you still went ahead mixing up things like Crypto trading and forex. You should try to be more specific and straightforward when discussing something next time.

However, Crypto trading and crypto investment are distinct…something very simple, investors buy and Hodl bitcoins or other crypto currencies while the traders either buy and trade coins with its price swings and fluctuations  or trade in other forms like futures or spot..

[Frankolala]

What about those that invest in bitcoin within 1-3 years that isn't up to a circle and because they have made good profits, they decided to sell all their hodlings hoping to buy back in the next bear market, will we categorize them as traders or investors since bitcoin investment duration should be with 4-10 years or more. A long-term investor wouldn't incur losses if his wallet isn't compromised but trading is losses upon losses.

[Denziiii]

What about those that invest in bitcoin within 1-3 years that isn't up to a circle and because they have made good profits, they decided to sell all their hodlings hoping to buy back in the next bear market, will we categorize them as traders or investors since bitcoin investment duration should be with 4-10 years or more. A long-term investor wouldn't incur losses if his wallet isn't compromised but trading is losses upon losses.

There’s actually a middle ground between pure investing and active trading. Someone who buys Bitcoin, holds for 1–3 years, then exits after strong profits intending to re-enter during a bear market is closer to a cycle investor or swing investor than a day trader.

A trader usually depends on constant short-term entries and exits, often exposing themselves to repeated emotional decisions and higher chances of losses. But someone holding through a large portion of a Bitcoin cycle is still investing just with a shorter time horizon and an attempt at market timing.

[Lenubari]

“Difference between trading and investment” in which context? You know trading and investment are things that are very broad but you didn’t specify in you topic title and in your post body you still went ahead mixing up things like Crypto trading and forex. You should try to be more specific and straightforward when discussing something next time.

However, Crypto trading and crypto investment are distinct…something very simple, investors buy and Hodl bitcoins or other crypto currencies while the traders either buy and trade coins with its price swings and fluctuations  or trade in other forms like futures or spot..

Investors and traders are here to make the good use of their time. Cryptocurrency is for everyone but at the same time, not for everyone. We prioritize winning and also ensure we're getting the bigger part of our trading and investment. This space is not that challenging, you just have to do what you got to do inother to stay alive in the space. Trading and investment are both different but it boils down to one goal and that's ensuring we're sticking to major profits in the space.

[ColdLava40]

This is very wrong. Crypto and forex are just the market people are trading.

Had this thought too, op missed it up.

Id rather just term them all as The forex market, which  comprises of different types. It's either you trade crypto, currency, stock or synthetics.

He does have a few points that stands out. Investment is different from trading. For investment you require a plan that looks only to long term. Your target is mostly based on 4-5 years gain.

Trading it self, you can be a day trader, scalper or even a swing trader. Which ever you want to become is up to you, but it doesn't guarantee you that in a couple of year you will be making profits.

That's why we always hear the saying that trading is risky, it's a form of investment but far more different from the regular where you just place your money and watch it grow.  It needs your time, effort and dedication.

[Frankolala]

What about those that invest in bitcoin within 1-3 years that isn't up to a circle and because they have made good profits, they decided to sell all their hodlings hoping to buy back in the next bear market, will we categorize them as traders or investors since bitcoin investment duration should be with 4-10 years or more. A long-term investor wouldn't incur losses if his wallet isn't compromised but trading is losses upon losses.

There’s actually a middle ground between pure investing and active trading. Someone who buys Bitcoin, holds for 1–3 years, then exits after strong profits intending to re-enter during a bear market is closer to a cycle investor or swing investor than a day trader.

A trader usually depends on constant short-term entries and exits, often exposing themselves to repeated emotional decisions and higher chances of losses. But someone holding through a large portion of a Bitcoin cycle is still investing just with a shorter time horizon and an attempt at market timing.

You can sugar coat it and call it whatever, name but I see that person as a trader because he is selling ti buy back. A long-term investor wouldn't sell any Sat till after he has achieved a good stash of bitcoin overtime because if you sell, you will depreciate your portfolio. Of which, your bitcoin stash should be increasing in value overtime. It's better to hodli the bitcoin that you have bought even if you're on profit than to sell.

[Makus]

I think you got the types of trading wrong, you cannot say that the types of trading are forex and crypto trading because they are simply the different types of market that you can trade on. When you are talking about the types it's actually day trading, scalping, swing trading and so on. These type of trades can be done in both crypto trading and forex trading. Forex trading requires a lot of knowledge and experience unlike investments although this doesn't mean that it doesn't have it's own risks but it is right to say that trading is more technical.

[Big Dirams]

This is very wrong. Crypto and forex are just the market people are trading.

Types of trading
Scalping
Day trading
Swing trading
Long term position trading (which some people can say it is an investment, but not an investment as long as you use derivatives market for it. Although, it is debatable.

Thanks to you for making clarification for the OP and many other members that was lost though. At least now many now understand the types of trading that we have and their little differences though, and it won’t be of difficulty for them to understand just as their names implies we can find the best way of knowing their differences.

 
 But I know some users might find it troubling to know their differences but let me make brief explanation about them.
1. Scalping: scalping is just like a minutes or seconds trading where trader looks for positive positions to open entry without using stop loss and take profits but just wait for little pumps then boom they make profits or close in loss. It just a short period of time trading only for taking profits asap.
2. Day trading: just as the name implies, it just a day activity where the trader opens a position and make sure to take their profits within that same day or either the position hit loss but it all have to be that same day. And this is a common type of trading done by many traders. But it risky though.
3. Swing trading: @Charles-Tim already made little explanation on it, swing trading is when a trader holds an entry or position for few days. Swing traders make analysis and strategy base on days or week before their entries could get picked or even hit their possible targets. They deal with the market swings and market trends, checking for support levels and resistance level and more factors are considered too.
 

But mind you OP all this are very risky but all comes with their own risk though. Hope this is helpful.