Trading is the buying and selling of stocks or other financial instruments over short periods with a view to making a profit between the opening and closing of a position. By contrast, investing is the accumulation of assets over the long term. Although investors adjust their portfolios, this is part of a longer strategy rather than creaming-off short-term profits.
Investments consistently grow over the long term, investing is rational. But trading is closer to an afternoon at the races.
Wall St traders rank among the highest paid members of society, out-earning doctors, engineers, teachers and countless other seemingly more useful occupations. Trading is perceived as lucrative and glamorous.
Trading has become available to the little guy since the onset of the Internet.
There's no shortage of cut-price brokers clamoring to execute your trades, computerized platforms offering to put your system on auto-pilot, and courses promising untold wealth for just a few hours a day in front of the screen. There's all kinds of strategies - swing trading, day trading, momentum trading, scalping... in all kinds of markets - stocks, forex, options, future, commodities...
It all sounds too good to be true. But is it?
Markets are supposed to be efficient. That means that the price of any stock, currency etc is the right price taking account of everything that's publicly known about it. If that's so, how come the big boys can make big bucks? Maybe it's because they know just a little more than you or me, or maybe because they can take advantage of any new facts that little bit quicker.
Trading is basically a zero-sum game. The act of trading doesn't generate value in itself. Every dollar gained by someone is a dollar lost by someone else. Although historically cheap, commissions still take a chunk out of every trade. These can soon mount up if you're making many trades a day, and remember every trade carries a commission going in and another coming out.
All this doesn't mean trading isn't for the small player, but it does mean s/he should proceed with extreme caution. There are individuals out there doing very well from trading, but there's a good many that have lost their shirts.
If you're still interested, accumulate knowledge, read widely, get involved in Internet forums... Decide what you're going to trade and adopt, adapt or create a system.
Then open one or more practice accounts. Get to know the platform. Test your system. Tweak it until you're confident you can make a consistent profit. Then, and only then, consider doing it for real. If you take the plunge, remember the psychology differs when you're playing with real money - your money. Stay disciplined.