A symbolic black figure with a clock face sprints after a line of dollars. Representing trading and a trader chasing dollars to find profit. The article makes the point that trading is not investing although extreme media coverage can leave the impression that trading is investing and that investing is trading. It is not. Trading refers to a broad range of shorter term strategies that can be used by an experienced investor. The essence of trading is an investor’s belief that a buyer can be found, in the near future, to pay a higher price for a share being purchased today. If that bet is right, the investor profits, if the bet is wrong, a loss results.
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Headline news warnings and stock market risks explained as possible market overreactions. Reactive trading and emotions can drive market action. At such times, turmoil, not smart investing decisions, drive markets. To avoid being spooked, and trading with your emotions, inform yourself, do your homework and take the long view.