If you’re new to trading on financial markets, your first question is, “Where do I start?” Many newcomers quickly feel overwhelmed by the flood of information when they open their demo trading account for the first time and are tempted to try the second step before they do the first. But it is important to understand the basics of trading first.
What is the difference between investing and trading?
Investing and trading are two different ways to make a profit in the financial market. Many, for whom the world of finance is new territory, do not initially understand the difference between the two methods. In the following, we explain what is meant by both.
The objective of an investor is to increase its net assets progressively by buying and holding a portfolio of equities, bonds, funds, and other investment instruments.
Investments are often kept for years or even decades. Investors will benefit from certain supplements such as dividend payments, coupon payments and/or interest during this period. If markets fall in value, many investors still retain their investments as they hope the price will recover. Investors, therefore, consider the long-term value of their investments. For them, it is not so important how strong the daily price fluctuations on the market are.