By Mohammad Badran | Staff Writer
Investing is the process of holding the security for the long-term, relying on the security’s fundamentals. It is associated with lower risks because of the extended holding periods. For example, you buy a stock today that you believe is undervalued and is expected to grow over the next 5 years.
Trading entails holding a security for a short-term period of time (1 day to 6 months) relying on technical analysis of current market prices changes, which implies higher risks than investing. For example, you buy a stock today in the hope that the stock price will increase next week because of some expected good news.
Investors and traders make profits, but because of the active participation of traders, taking more risks, they are entitled for higher profits results.