While investing and trading have the same concept, to make a profit in the financial markets, the strategy in which is used to achieve the profits is very different. �Investing usually involves buying and holding over a sustained long-term period whereas trading usually involves buying and selling over a short-term period, as well as short selling.

On face value it would seem that trading is the better method to do, because you�re in and out of trades making profits on a daily basis, but actually, in the UK about 70% of people lose money attempting to trade and this is because of multiple factors, which include time, skill and luck (loss rate varies from broker to broker).

Why choose Investing?

The main goal of investing is to build wealth over a long period of time from holding stocks, index funds and numerous other securities. Investments that are held for extended periods can benefit from dividends, stock splits and interest rates. Price fluctuations from short term volatility are simply �blips� in the long-term picture and investors who are thinking long term should not be concerned. Usually, decisions for an investment are made on the basis of fundamental data such as income statements, P&L and operations.

Let�s say you buy 10 shares of  ABC PLC which cost �100 a share. That�s �1,000 for 10 shares. After 12 months, those shares are now �120 a share. That means you�ve made a nice �200 profit over the year as the shares have gained 20%. You can then sell the shares and reinvest them into something else. If the market underperforms however and the shares drop 15%, the initial �1,000 would now be worth just �850. This means you�d be in a loss of �150. As an investor, you�d have to decide whether or not you think the shares will rise in the future and you should hold, or you should sell now and realise the loss and move on.

Investing is a long-term game, which requires not much intervention and some research. If you are in the UK, you could build up your own�stocks and shares ISA�and have a large tax free lump sum over the space of many years of compounding. Investing allows you to get on with your life, family and your job while knowing that in the background your money is working for you, for the future.

Why choose trading?

The goal of trading is somewhat like investing. Traders want to make returns, but they want to do it more frequently which means more time is required and more transactions are involved. Trading platforms allow you to trade commodities, stocks, forex and many more securities. To become a consistently successful trader, you must be able to learn many aspects of the financial markets and then apply these on the basis of when the trade comes to you. Most traders in the UK lose money because they don�t have the patience, skillset or right risk management in place.

Unlike investing where you can simply leave your money to work for you over a long period of time, with trading you need to work the money on a daily, weekly, or even hourly basis and this requires time sitting at a screen analysing the markets. There are many companies and services available to traders, like Minipip, which can help identify possible opportunities, but even then they�re not always going to be accurate or correct.

Which is right for me?

Picking the right way to invest all comes down to personal circumstances. Below we have made a table that outlines the pros and cons of trading and investing. We hope then from this you can apply your personal circumstances to match the best way forward.