Trading vs. investing: Which is better for you? - Business Insider

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Trading and investing are two approaches to playing the stock market that bring their own benefits and risks

— single investment vehicles that hold a variety of or a large number of assets. It's also important to consider your risk tolerance and estimated withdrawal date when selecting your portfolio's asset allocation.

In the world of trading, a stock's fundamentals are fairly irrelevant. Even if a stock's value is expected to go up over the long-term, that doesn't necessarily mean it will do so over the next few minutes, or even days. That's why traders tend to rely more heavily onTrading can be a risky enterprise. If a trade goes against you, you can lose a lot of money in a short period of time.

It demands minimal diversification since it's difficult to monitor more than a few trades at the same time. Also, diversification by its "evens-out" nature mitigates both the ups and the downs — and traders want the maximum highs they can get.

 

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