What is Trading

Trading is the process of buying and selling assets—such as currencies, stocks, commodities, or cryptocurrencies—with the aim of profiting from their price fluctuations.

Trading vs Investing

Although both involve buying assets, they differ in timeframe, approach, and even the source of profit:

• Trading is typically short-term, ranging from minutes to weeks.
• Investing is long-term, ranging from months to years.

A trader's profit comes from a single source: price movement. They buy lower and sell higher (or vice versa: sell first, then buy back), and the result is realized only when the position is closed. This difference is called capital gain.

An investor has two sources. The first is the same capital gain. The second is dividends: if a company makes a profit, its shareholders can receive a portion of it without selling the share. That is why a long-term investor focuses not only on the price chart, but also on the company's real financial condition.

It is important to understand that a dividend is not a guarantee. A company may reduce or stop paying it, and many companies—especially fast-growing tech companies—do not pay dividends at all and reinvest all profits back into the business.