Investing vs Trading: What's the Difference?
When deciding how to manage your money, it’s important to understand the differences between Investing and trading. Trading is a greater time commitment than Investing and provides quicker losses and gains. A trader who times the market well can outperform an investor. On the other hand, an investor can sometimes see better long-term returns than a trader.
Unlike investor who are typically looking for capital gains or income over the long term, traders are looking for quick profits based on short-term market movements. A trader will often try to capitalize on intraday movements in the market, whereas an investor may be more focused on long-term trends.
In terms of actual trades, trading is usually done with more volatile stocks, such as those listed on the NASDAQ Composite. For example, U.S. stocks were mixed after the close on Thursday, with the Dow Jones Industrial Average falling 0.62% to 34,030.15 and the S&P 500 gaining 0.41% to 4,173.63. The Nasdaq Composite dropped 0.46% to 13,814.92, with Versus Systems Inc (NASDAQ:VS) which was down 41.60% to 0.97 in late trade, being the biggest loser.
The top performers on the NASDAQ Composite were Versus Systems Inc (NASDAQ:VS) which rose 172.09% to 1.66, Bright Green Corp (NASDAQ:BGXX) which was up 39.09% to 3.75 and Astrotech Corp (NASDAQ:ASTC) which gained 18.18% to close at 7.50.
In terms of day trading, traders may look to capitalize on news events or announcements from central banks. As Fed interest rates are released daily, all central banks comply with interest rates to report the same interest rates and to trade. This can create opportunities for day traders to capitalize on market movements generated by the news.
Gilead Sciences (NASDAQ:GILD) shares rallied in early Friday trading in response to their Q1 earnings call. The company reported better than expected revenue and a narrower than expected loss. Guidance looks conservative (higher Veklury guidance vs consensus) and the company is making good progress on pipeline drugs.
While both day trading and Investing aim to make a profit, their tactics are somewhat different. Day trading refers to short-term trading in which a stock is bought and sold within one day, usually with the aim of making a quick profit. Investing, on the other hand, refers to a longer-term approach, in which a stock is held for a period of time in order to capitalize on its potential for growth.
Additionally, the PINK brand appears to have rounded the corner, reaching $2B in TTM sales (vs. prior $3B+ peak) with a healthy 40% digital penetration. The company’s growth prospects look positive, with its recently announced partnership with Walmart and its focus on expanding into other markets.
Lynx analysts told investor that expectations will 'ratchet higher' for Apple's upcoming earnings report. Apple shares are trading above the $150 mark Thursday, up more than 3%.