The Difference Between A Day Trader And An Investor

By James Larson

Although many people seem to confuse day trading with investing these two are not the same. Whereas investing is done within long periods of time day trades usually buy and sell stock in much shorter time intervals. Even though it all depends on the stock a day trader does not invest in a company. They buy and sell stock with the intent of making money based on the small fluctuation in price.

There have been parallels been made between day trading and gambling. The truth is that the two don't have many similarities. A day trader must base his actions on specific data and analysis before a stock purchase and sale is made. Luck doesn't play a role in the decision making process of either the investor or the day trader.

Stock prices fluctuate constantly. Depending on how many people buy or sell a stock then the price changes. Day traders rely on this fact to make money. When a day trader has information that says a stock price will rise in the near future they will make a purchase and hold until right before the prices starts dropping again. It is these daily small fluctuations that the day trader depends on to make a profit.

While a day trader is looking for relatively small returns real investors are in it for the long run and they are looking for much larger price fluctuations in stock. Investors research and buy so that their return is preferably higher than what they would get if they save their money in the bank also taking inflation in consideration.

If you are contemplating between the two then you should know that being a day trader requires a lot of time patience and practice. It could take a long time before you get used to the everyday shifts and changes in the market. The one thing you should be aware of is that you cant become an expert day trader overnight. The same things goes with becoming an successful investor.

The primary difference between an investor and a day trader is time and percentages. These two terms shouldn't be confused because they are used to describe two different techniques.

Educating yourself about the techniques involved in day trading and investing is very important if you are starting out. You need to be able to spend some time and learn what is involved in the two processes. - 23162

About the Author:

The best thing you can do before you start investing is to talk to an Investment Advisor. You need to find a professional in your city though. If you live in Toronto then you should find an Investment Advisor Toronto.