A Beginners Guide: Invest or Trade

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Obviously if you are just starting learning about investments and trading you may notice all the jargon that this field uses. One of the most common mistakes people make is not knowing what they want to do, invest or trade.

They are very similar but they are also very different. The main difference is that trading is short term and investing is longer term assessing good investment opportunities often makes use of fundamental information, such as earnings, but can also use technical analysis to detect long-term trends. If one is trading they usually do it at an interval of less than a week but this may be even up to a month or more. Traders assess good trading opportunities by typically making use of trading systems or chart-based techniques to detect short-term patterns.

One of the main advantages of trading over investing is that it provides the ability to make money regardless of the overall direction of the market or the price of an individual stock. Investing though is what I consider building wealth. Warren Buffet is the first person that should come to mind with investing. He has built up his empire by investing in several companies and holding them for very long periods of time. Of course there are others who have made millions simply trading, for the beginner because I suggest sticking to basic investing and hold your securities for over a month to be safe. Over time as you get better is when you could shorten you time frames.

I remember when I started moving to trading I was overwhelmed by all the information that I thought I had to learn before I started. Before long though I realized that the best way to learn is by doing, so I started out not knowing everything but enough to get the job done and before long I had learned more from just being in the market than any text or video could teach me .

There are places out there that make it very simple to start, which should be your goal by now. One for instance is Sharebuilder.com they let you buy partial shares of stock on every Tuesday for a $ 4 commission charge which is very low. Another place if you want to move into trading is FXCM they will let you trade Forex for no commission except for course the bid / ask spread and you can start for as little as $ 25.

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