I heard trading is more about investment than speculation. Is it true?

[Dian]

I am confused about investment, trading and speculation now because sometimes I think investment is also as a kind of long term speculation. Am I right? Thanks

 

[piphoe]

investing, speculation the only thing we quibble about is the time frame?

your looking 3 yrs out, i'm looking 3hrs out

who is the real speculator here?

 

[timsk]

I am confused about investment, trading and speculation now because sometimes I think investment is also as a kind of long term speculation. Am I right? Thanks

Hi Dian,
To speculate with the view to making a financial gain means that you are prepared to risk X amount of money in the hope that it yields a return. Traders do this in the short term which, very roughly, means anything from a few minutes through to a few weeks. The majority of them are happy to trade both sides of the market, i.e. to go long when it's rising and to go short when it's falling. This is the focus of T2W and what most of our members are doing or, at least, attempting to do.

By contrast, investors (in financial markets - as opposed to property or other asset classes) tend to hold their positions for much longer periods, typically for years or even decades. For the most part, they tend to only have long positions in the hope that the value of their investment - e.g. in company shares - will rise over time. If this is your objective, then there are other sites which will serve your needs better, e.g. The Motley Fool.

Hope that clarifies things for you.
Tim.

 

[Dian]

Hi Dian,
To speculate with the view to making a financial gain means that you are prepared to risk X amount of money in the hope that it yields a return. Traders do this in the short term which, very roughly, means anything from a few minutes through to a few weeks. The majority of them are happy to trade both sides of the market, i.e. to go long when it's rising and to go short when it's falling. This is the focus of T2W and what most of our members are doing or, at least, attempting to do.

By contrast, investors (in financial markets - as opposed to property or other asset classes) tend to hold their positions for much longer periods, typically for years or even decades. For the most part, they tend to only have long positions in the hope that the value of their investment - e.g. in company shares - will rise over time. If this is your objective, then there are other sites which will serve your needs better, e.g. The Motley Fool.

Hope that clarifies things for you.
Tim.

Thank Tim for the great response.

 

[Dian]

investing, speculation the only thing we quibble about is the time frame?

your looking 3 yrs out, i'm looking 3hrs out

who is the real speculator here?

Thank you for the reply.

 

[Splitlink]

Investment needs a good analysis of the fundamentals of a company. Sharescope used to cost me about 90 pounds per year, price must be a lot more by now. They have two services, you only need EOD prices, which is cheaper. Once you know what you are looking for, it is all there and you can search by column.

 

[gerryg]

I am confused about investment, trading and speculation now because sometimes I think investment is also as a kind of long term speculation. Am I right? Thanks

Well in a broad sense investing is finding undervalued assets and buy them expecting them rise in value. And yes its referred to the long-term activity.
Profiting from asset fluctuations in short and medium term is speculation. You can bet on the decrease in price as well as on increase.
I think general distinction is that investing are a complex of efforts to save (and sometimes increase your capital) while speculation is purposeful earning with higher degree of risk on capital.

 

[Splitlink]

Well in a broad sense investing is finding undervalued assets and buy them expecting them rise in value. And yes its referred to the long-term activity.
Profiting from asset fluctuations in short and medium term is speculation. You can bet on the decrease in price as well as on increase.
I think general distinction is that investing are a complex of efforts to save (and sometimes increase your capital) while speculation is purposeful earning with higher degree of risk on capital.

Isn't any business? We have started two family businesses and they took all our capital. Heaven help us if they had failed. One took off from the start. The second took two years to make a decent profit.

 

[SmartGeek]

Forex Trading could be anything, it can be business, it can be job, but it could never be a Gamble, we need to consider that.

 

[forker]

Forex Trading could be anything, it can be business, it can be job, but it could never be a Gamble, we need to consider that.

Gambling, playing a game where you have no control of the outcome effectively betting on an unknown

Trading, betting in a market where you have no control of the outcome, effectively betting on the unknown

What's the difference? Don't tell me analysis is the difference because that doesn't give you control of the unknown

 

[dbphoenix]

Gambling, playing a game where you have no control of the outcome effectively betting on an unknown

Trading, betting in a market where you have no control of the outcome, effectively betting on the unknown

What's the difference? Don't tell me analysis is the difference because that doesn't give you control of the unknown

Analysis doesn't give one control of the unknown, but it does give one control over the outcome, i.e., what he does or does not do as a result of his management protocols, which is one reason why trading is more like poker than craps or roulette.

 

[forker]

Analysis doesn't give one control of the unknown, but it does give one control over the outcome, i.e., what he does or does not do as a result of his management protocols, which is one reason why trading is more like poker than craps or roulette.

What's the difference between the unknown and the outcome of the unknown? You might have limited control over how the outcome affects you but it doesn't give any control of it. Some people draw similarities with poker but with poker it's an even playing field whereas in the markets the ones with the best access to knowledge and the fastest processing of that knowledge and the closest access to the markets are not equal to someone trading from a home office. This gambling debate has gone on for as long as I can remember and everyone has a different take on it. For me, if you are placing a trade on probability then its gambling. Slice it anyway you like it doesn't change the fact that you ultimately don't know what's going to happen.

 

[dbphoenix]

What's the difference between the unknown and the outcome of the unknown? You might have limited control over how the outcome affects you but it doesn't give any control of it. Some people draw similarities with poker but with poker it's an even playing field whereas in the markets the ones with the best access to knowledge and the fastest processing of that knowledge and the closest access to the markets are not equal to someone trading from a home office. This gambling debate has gone on for as long as I can remember and everyone has a different take on it. For me, if you are placing a trade on probability then its gambling. Slice it anyway you like it doesn't change the fact that you ultimately don't know what's going to happen.

No, one doesn't know what's going to happen, but, if he's planned thoroughly and properly, he's addressed at least the most likely contingencies along with detailed protocols of what he will do about each of them, hence the similarity to poker. Most traders just place a trade with or without a stop and then sit there like a deer in headlights and hope for the best, in this case the similarity to craps or roulette.

And poker is hardly an even playing field. If that were the case, there would be no difference between the professional and the amateur.

 

[forker]

No, one doesn't know what's going to happen, but, if he's planned thoroughly and properly, he's addressed at least the most likely contingencies along with detailed protocols of what he will do about each of them, hence the similarity to poker. Most traders just place a trade with or without a stop and then sit there like a deer in headlights and hope for the best, in this case the similarity to craps or roulette.

And poker is hardly an even playing field. If that were the case, there would be no difference between the professional and the amateur.

Like I said, everyone has a different opinion on this.