Trading vs Investing: Which One Is Worth Trying?

Comparison image showing two women trading money from goods versus a chart of a growing investment

What is trading?

Trade is a basic economic concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties. Trade can take place within an economy between producers and consumers.

International trade allows countries to expand markets for both goods and services that otherwise may not have been available to them. It is the reason why an American consumer can pick between a Japanese, German, or American car.

As a result of international trade, the market contains greater competition and therefore, more competitive prices, which brings a cheaper product home to the consumer. The trade voluntarily offers goods or services and obtains other goods or services in return.

Trading is also called an exchange or a swap. The first type of trade is barter. The barter was the exchange of goods and services for other goods and services. Barter involves trading things without spending money.

Stock Trading

Stock trading requires buying and hold stocks for a relatively short time period of time. Traders utilize short-term investments to benefit from anticipated fluctuations in the market. Compared to investing, trading is a way to generate active income. Here are different types of stock trading: 

  • Scalping and day trading is buying and selling stocks during the same day. Scalping is when the trade occurs in a matter of minutes or seconds. 
  • Swing Trading is when traders buy and sell the same stocks over a period that does not exceed a few weeks.
  • Position trading and passive trading are more long-term strategies (sometimes months). They rely on general market trends and peaks to decide when to sell. 

Stock trading is a risky way to earn money. It requires having expertise in finance and some money to invest. 

What is investing?

An investment is an asset or item acquired with the goal of generating income or appreciation. Appreciation refers to an increase in the value of an asset over time.

When an individual purchases goods as an investment, the intent is not to consume the good but rather to use it in the future to create wealth. An investment always concerns the outlay of some asset today—time, money, or effort—in hopes of a greater payoff in the future than what was originally put in.

An investment is the total amount of money a shareholder has spent on buying a company’s shares. It is a term used for business, financial and economic management, related to saving or reversing spending.

For example, an investor may purchase a monetary asset now with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.

Differences and similarities between trading and investing

Trading and investing both imply acquiring goods or other valuable things. Trading is about getting something to use shortly but investing is buying and keep for future benefits. Stock trading relies on short-term strategies to buy and sell stocks for profit, whereas investing involves spending money on stocks expecting a future ROI in the long run.

Infographic showing the main differences between trading and investing.

A day trader usually expects to see results and make money on a day-to-day basis. He exchanges time for money, plus the amount of work and his expertise dictate his earnings. Whereas, an investor aims to make passive income. His capital can keep growing even when he is not working.

How do traders make money?

Traders make money using trading strategies that indicate where the market is likely to move forward or decline and then place orders accordingly to capture that move. To be able to benefit not only from positive exchanges but also from falling markets, many retailers use a combination of short orders and buy orders.

Therefore, if the value of those shares increases, you will make money by selling them again at a higher price. This is trading in the stock market. You buy something at one price and manage to sell it at a higher price. Researchers found that 3 percent of traders made money.

Trading Jobs Pay Well. Even those concerned about the high college prices still feel that although the costs may be high, it is always worth it because it will increase their ability to earn a lifetime.

Day traders typically target stocks, options, futures, commodities, or currencies, holding positions for hours or minutes before selling again. Day traders enter and exit positions within the day, hence the term day traders. They rarely hold positions overnight. The goal is to profit from short-term price movements.

How do investors make money?

You can earn money when your investment goes up in value. For example, the stock market price will not remain the same price forever – appropriately, the company grows and makes money and becomes the most important as a whole.

After all, because that total amount is spread across all company shares, the market price per share tends to rise.

For example, suppose the market price of company X is $ 5, and you buy ten of its shares. The value of your investment is 10 x $ 5 = $ 50. However, let’s say that company X is doing well, and its stock is now selling for $ 6. Yes, you still have ten shares in it. That means your investment value is now 10 x $ 6 = $ 60.

You only paid $ 50 at the beginning, so if you could sell those shares, you would have $ 10 more than you started with. That means you get $ 10 benefits.

Investing basics: Bonds investment

When you are paid because you are the owner of the investment. You can also earn money by investing and collecting payments. For stocks, those payments are usually shares.

On bonds, you get those interest rates we mentioned. Suppose you buy a $ 100 bond that pays 3% interest for ten years. Each year, you will be paid $ 3. At the end of the decade, you will be reimbursed for $ 100 and receive $ 30 in interest.

The current average income of investment analysts is just over $ 66,000, in May 2021. Bonus and profit-sharing structures are common, with bonuses as high as $ 21,000 and profits as high as $ 13,000. Up to $ 4,000 a year commissions are also reported.

There is a huge difference in salary from experience. While salaries at the entry-level usually stay below $ 60,000.6 for 10 to 20 years of experience it brings the salary closer to $ 100,000. Experience over 20 years can bring in a salary of $ 140,000.

How do traders pay taxes?

Profits made from stocks that you have for one year or less before sale are taxed at the rate of temporary income gains, similar to your regular tax brackets. Refunds made in stock for more than a year depending on the amount of long-term tax earned: 0%, 15%, or 20%, depending on your average income. Day traders pay short-term capital gains of 28% on any profits. You can deduct your losses from the gains to come to the taxable amount. To avoid paying taxes,

  1. Use the mark-to-market accounting method.
  2. Take advantage of being exempt from wash sale rules.
  3. Deduct the expenses involved in your trading activities.
  4. Reap the benefits of not being subject to the self-employment tax.

How do Investors pay taxes?

Investment income may also be less than an additional 3.8% tax when you are above a certain income threshold. Generally, if the converted income exceeds $ 200,000 (single files) or $ 250,000 (joint installments), you can pay tax.  To avoid paying taxes on investments, follow this,

  1. Capital Gains Should Be Long-Term.
  2. Keep Your Portfolio in Tax Sheltered Accounts.
  3. Invest in Municipal Bonds.
  4. Consider Real Estate Investments.
  5. Fund Your 401(k) Beyond Your Employer Match.
  6. Max Your IRA Savings Every Year.
  7. Take Advantage of an HSA If You Can
  8. Consider a 529 for Education Expenses

Types of trading jobs and markets

Here are some of the most popular trade jobs and a few markets to consider:

  • Day trader
  • Momentum trader
  • Position trader
  • Scalper
  • Swing trader
  • Bond trading
  • Commodity trading
  • Equity trading and derivatives
  • Fixed-income trading
  • Forex trading
  • Flow trading
  • Hedge funds trading
  • Market trading
  • Mutual funds trading
  • Principal trading
  • Proprietary trading
  • Stock trading

Types of Investment Jobs

Investment banking positions from junior to senior:

  • Analyst (grunt)
  • Associate (glorified grunt)
  • VP (account manager)
  • Director (senior account manager, rainmaker in training)
  • Managing Director (rainmaker)
  •  Investment banker
  • Compliance analyst
  • Financial advisor
  •  Insurance advisor
  •  Financial analyst
  • Senior accountant
  • Hedge fund manager
  • Financial software developer
  • Private Equity Associate
  • Chief Financial Officer
  • Chief compliance officer

10 Best Trading Platforms 2021

A trading platform (also known as an electronic trading platform) is a set of tools and software design to manage market positions using an online broker or another means. The best trading platforms offer affordable fees, a secure environment, and all the features needed to trade regarding the bid and ask prices or other relevant criteria.

Here are some of the best online brokers for 2021:

Words cloud displaying the name of the  best trading platforms: Td Ameritrade, Fidelity investments Inc, CMC markets, Charles Schwab, E-Trade, Weibull, trade station,

TD Ameritrade 

TD Ameritrade is a trader that provides an electronic trading platform for trading financial assets including regular stocks, preferred stocks, futures contracts, exchanges trades, forex, options, cryptocurrency, mutual funds, fixed investments, loans, and financial management services.

XM Global

XM Global is a safe online broker that I use to grow my portfolio investments. You can try CFD & Forex and trade on gold, indices, stocks, and oil. 

Beginners can start with a demo trading account to learn the basics of trading. They offer four types of trading accounts: XM web trader, MT5, MT4. XM also provides some helpful resources like video tutorials and a personal account manager.

TD Ameritrade is the best all-around choice for beginners because it provides the best combination of ease of use, educational content, and research tools new investors need to succeed. Better yet, stock trades are free ($0).


Fidelity Investments Inc., commonly referred to as Fidelity, formerly known as Fidelity Management & Research or FMR, is an American financial services company based in Boston, Massachusetts. Best for everyday investors.

Fidelity is one of the best-rounded brokerages available today, with no commissions on stock, ETF, or options trades and a selection of no-expense-ratio index funds.

Start trading on CMC Markets

CMC Markets is among the best brokers for beginners. It is a financial services company that allows you to trade CFDs such as cryptocurrencies, treasuries, indices, forex pairs, commodities, shares & ETFs. CMC Markets offers its services in multiple languages. They provide tutorials and guides helping you to start trading (on YouTube and their website).

Start trading with CMC Markets

Charles Schwab 

Charles Schwab Corporation is a US financial services company. Provides banks, commercial banks, e-commerce platforms, and asset management advisory services to both retail and institutional clients.

Best IRA accounts. Charles Schwab offers two web-based platforms, and Street-smart Edge (its premier trading platform). The Schwab Mobile and Street-smart Mobile apps round out the platform offerings.6 7 The company makes it easy to open and fund an account, and you can do so online, via mobile app, by phone, or in one of its 360+ branches.

We found Fidelity to be quite user-friendly overall. It has three platforms, including a web version, the downloadable Active Trader Pro, and Fidelity Mobile App. Opening an account is straightforward, and as with many brokers, you need to fill out additional paperwork to enable features like margin and options trading.

Schwab and Fidelity offer reasonably easy-to-navigate websites with screening tools, portfolio analysis, news, educational content, and basic order tickets. The mobile apps for both brokers are useful, but like most broker-supported apps, they have limited functionality compared to the standard platforms.

Interactive Brokers 

Interactive Brokers is among the Leading online trading solution for traders, investors, and advisors, with direct global access to stocks, options, futures, currencies, bonds, and funds. Best for professionals.


E*Trade Financial Corporation, owned by Morgan Stanley, offers an electronic trading platform to trade financial assets including regular stocks, preferred stocks, futures contracts, exchanges, options, mutual funds, and fixed investments. Best web trading platform. After testing 11 of the best online brokers over three months, E*TRADE (94.28%) is better than Merrill Edge (91.72%).


Webull Financial LLC offers an electronic trading platform, accessible via mobile and desktop computer, stock trading, currency trading, and options.

Webull is considered safe because it is regulated by top-tier financial authorities and provides a maximum of $500,000 investor protection, including a $250,000 limit for cash under the Securities Investor Protection Corporation’s (SIPC) protection scheme.

Trade Station

Trade Station Group, Inc. is a parent company of online security and futures firms and trading technology companies. Its headquarters are in Plantation, Florida, and has offices in New York; Chicago; Richardson, Texas; London; Sydney; and Costa Rica.

Merrill Edge

Merrill Edge is an electronic trading platform provided by Boa Securities, part of the Bank of America banking division. It was founded on June 21, 2010. Merrill Edge was created to combine Bank of America Online Investing with Merrill Lynch’s research, investment tools, and call center advisors.

If you are a beginner investor and already have a Bank of America account, Merrill Edge is a good broker to use to get started in online stock trading at a reasonable price. Seasoned investors who really care about platform and price points should potentially look elsewhere

5 Best Online Investment Apps & Platforms:

Investment apps and platforms offer online services giving access to the stock market. They facilitate stock portfolio management by allowing you to buy, hold, and sell stocks. Here are five of the most reputable investment platforms:

Infographic: Words cloud displaying the five best online investment apps: Robin hood, Fidelity investments, Ettore, Ally invest, E*trade.


Ettore is the preferred platform for those who are new or have limited investment time. With over 11 million users worldwide, tore is a massive investment platform where you can sell and invest in everything from Crypto assets to Stocks and CFD asset trading. In addition, tore has a very popular copywriting feature that allows you to watch what real traders do in real-time and automatically copy their trades.

Ettore users in the UK and Europe who wish to invest in stocks can do so for free, which means they are free to buy and hold real estate shares. The minimum deposit is $ 200 and the withdrawal fee is $ 5. Invest in both “real” stocks and Crypto assets on an easy-to-use tore platform.

Fidelity Investments

Fidelity Investments offers one of the most comprehensive web-based platforms for long-term investors. The cost is just under $ 5 per trade, which may sound like most of you have never invested online before, but are actually looking at a lower end. And the service has a reputation for good service in a variety of areas: interface, ease of use, commercialization, etc. It’s just a reliable, round platform.


If you are familiar with E*Trade it is probably because the company can advertise more than anything else listed here – or at least it may seem so if you watch television regularly. It has great value for fast performance, a highly advanced mobile platform, and a variety of research tools that help users learn on the go and teach themselves what the best trading decisions are.

However, revenues are slightly higher, at about $ 7 per trade. While this article is more about speculation than speculation, it would not be surprising to see E * Trade become a real leader among online retailers because of the combination of marketing power and mobile efficiency.

Ally Invest

Ally Invest is slightly smaller than its other counterparts, at least to its knowledge as it has become a typical investment destination. It has a few built-in benefits. First, trading for $ 4.95 will attract many new users looking for a first-class platform.

Plus, Ally has become fashionable as an alternative to banking, and investing through the platform makes a simple transition for those who are already using banking services.

As far as you are concerned, the most comprehensive writing specifically for beginner investments called Ally Invest is the best choice for trading stocks and options. It’s still a humble opinion, but it’s hard to argue with it for sure.

TD Ameritrade

TD Ameritrade is another well-established and reliable service. It is known for its featured services that help educate retailers, as well as access to mutual funds, which are often recommended as good options for those with limited experience. Money is close to the top, just under $ 7, but some would argue that you are actually paying for one of the most reliable services in the business.

Robin hood

Robinhood is one of the most popular investment tools available at this point. It is a new and secure app to trade in real-time and build a customized portfolio. You can benefit from commission-free trades in options trading, stocks, gold, cryptocurrency exchanges.

You can manage everything from your phone inside the app that is easy to use with a friendly interface. Robinhood is not reserved for young people and beginners. It is also an excellent online investment app for experienced traders.

Which is better, investing or trading?

To decide which one may suit you better between trading and investing, you need to consider these elements:

Picture showing day traders in a wall street building.
  • The risk factors: Stock trading usually involves a higher risk than investing.
  • The time frame: You can get quicker results with trading, but it does not mean you will make more profit in the end.
  • The initial investment: People who have less money to invest can benefit from stock investments, whereas investments generally require more money to see great results.
  • Active income vs passive income: If you want to generate passive income, investing is better than day trading. 

Both expert traders and smart investors can expect to make more money than the average nine-to-five jobs. However, to lower the risks, it would be better to take a training course or find a mentor if you are a beginner.

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