Trading vs Investing

95% of traders lose money. The End.

Are you willing to take the gamble?!

When the market took a dive in March 2020 but then jumped back again thanks to the Government stimulus package, the stock market caught my attention.

I saw everywhere on Youtube people talking about trading the market, selling courses on how to trade and how to win big trading. It had me.

…Almost.

It piqued my interest so I started learning about candlesticks, the different patterns traders interpret to see if the stock is going to go up or down and even got a trading account with IG.com.

I, of course, studied all their free tutorials and took advantage of the ‘demo’ money they give you to play around with but surprise surprise lost all my monopoly money instantly.

I simply did not have a clue as to how I use leverage or whether the stock price was going to go up or down and then I realised – my ah ha! moment – I’m not psychic. 

No one can predict the future and traders are no different.

5% traders in the world, who are masters of their trade and have been trading for years, may be able to make money but the rest of us do not.

So let’s please not confuse trading with investing. As trading is no different from gambling if you do not understand how the stock market works.

What is the difference?

Trading = Timing the market by buying the stock price when it falls and selling it for a profit when the stock price increases. Short term strategy for short term profits.

Investing = Building wealth over (ideally) years by buying and holding a stock (or stocks) for a longer period of time. Long term strategy for greater gains.

I invest I do not trade

Go and fill your boots if you want to learn how to trade, watch the stock prices of every second of every minute of your day and potentially make great gains, however, I quickly found out it wasn’t for me.

I want passive income and something that I can set and forget because I am a very busy person and do not have the luxury of watching a screen all day!

To get started with learning how to invest you can make the mistake I did and read a very heavy going, but incredible, book called: “The Intelligent Investor”…………which actually made me feel very unintelligent

OR 

You can watch free youtube videos from the channel “Pensioncraft” (do not worry, it is not a pensioner’s version of Warcraft or anything like that) and learn from that, which I found useful. 

Now this is a short blog this week because I’m hungover. Back here next weekend!

TO DO

Avoid trading if you have no idea what you’re doing.

NEXT TIME

How I, an amateur, invests.

HEALTH FACT 

Alcohol is bad for your liver but we drink it anyway.

DISCLAIMER

This blog is for educational purposes only and should not be construed as financial advice. It is purely opinion-based.

Please note that the link is an affiliation link so that if you want to take the plunge into investing and buy the book I recommend, you are buying it for the exact same price as you would normally apart from a get a small commission from it, which I would really appreciate. Thank you!