Day trading vs investing are two different methods of attempting to make a profit in the stock market. Both investors and traders actively participate in the market to see gains or losses. Investors seek larger returns over an extended period by buying and holding on to their stocks. Day Traders on the other hand take advantage of rising and falling market conditions to enter and exit positions over a shorter time frame. In which they take smaller profits, but they are more frequent.
Investing is an effective way to put your money to work and potentially build wealth in the stock markets. There is something unique about being able to take your money and see it grow. Almost as if you are giving your money a job, and they are out working for you. Financial independence and time freedom are what most people are searching for. They don’t realize investing for a long period or day trading can be the key to unlocking that and taking control of your future.
Day Trading vs Investing: Planting the Seed
Investing is not as scary as it may appear, just think of it as having a garden. Seeds can grow into amazing flowers and plants. To maintain flowers, they need the right care and attention. But if you do not water them regularly, and provide them with sunlight and water, they will not thrive. Before you start gardening, you would have to do some research. At what time of the year is best for certain plants? Should they be in direct sunlight or partial shade? What plants are not high maintenance?
The same line of questioning goes for investing. What do you want to invest in? How much money should you invest? How much time will you need to reach your goals? What will be your investment strategy? What are the best hours to invest? You can start small and with the earnings reinvest them; as if they were new seeds. Which would help your investments grow even more just like it would your garden.
Day Trading vs Investing: Investing
The goal of investing is to build wealth gradually over an extended period, in which you buy and hold a portfolio of stocks, mutual funds, bonds, and other investment instruments. Investments are often held for years, or even decades, taking advantage of perks like interest, dividends, and stock splits along the way. Markets fluctuate, and investors are usually more worried about market fundamentals. An example would be price-to-earnings ratios for management forecasts. Investors often increase their profits by compounding or reinvesting any profits and dividends into additional shares of stock.
Anyone who has a 401k or an IRA is investing, even if they are not tracking the performance of their holdings daily. The goal is to grow a retirement account over several years. The day-to-day fluctuations of mutual funds are less important than consistent growth over an extended period. Things like Traditional IRAs, 401Ks, 403Bs, 457s, and Roth IRAs. However, all of these retirement savings accounts pose limitations that prevent people from plowing a lot of money into them to save a lot in taxes. Most people don’t even know that their retirements are in the market and can lose money. People also don’t realize with a 401k they elect to not pay taxes now but pay them later. Why do people elect to invest in this way? Wouldn’t you need the most money when you are retired?
The rule of 72 is a simple equation created by Albert Einstein. He said that compounding interest is the eighth wonder of the world. It is the most powerful math equation. The rule of 72 is a formula that estimates the amount of time it will take for an investment to double in value when earning a fixed annual rate of return. Compounding interest can be seen in indexed universal life insurance policies. They are referred to as the rich man’s Roth.
A Rich Man’s Roth utilizes a special permanent cash value life insurance policy to accumulate tax-free funds over time and allow tax-free withdrawal later. This strategy is best for high earners who don’t want to utilize a Roth IRA, or for those who are maxing out their other retirement accounts and want to save even more money to maintain a particular standard of living in retirement. The Rich Man’s Roth has numerous benefits, including a reduced risk of taxes increasing over time and having to pay more later. You can not lose what you invest, and it can have an interest rate of up to 15%. Over the last few years, the range has been between 7-9%; which is still more than the bank offers you with a savings account.
Day Trading vs Investing: Day Trading
Day traders buy a stock at one point during the day and then sell out of the position before the market closes; typically, on the same day, it is not advised to hold a position overnight. The most successful day traders will use a strict methodology to analyze potential turning points in the market for entry and exit points. Traders will often use technical analysis to detect potential trading opportunities throughout the day. Technical analysis is the use of chart patterns and technical indicators to find turning points in the market where buyers and sellers could make a profit.
With trading options, you can purchase a call or a put option. A call option gives you the right to buy a stock and a put option gives you the right to sell the stock. If you believe the market is trending upwards, you would purchase a call option. If you felt the market was trending downwards, you would purchase, and put contracts. You would then sell your contracts for either following your strategy or minimizing a loss. Before you invest a single dollar in day trading, you need to learn about the market, so you have an understanding of what the overall stock market is doing.
You will need a trading platform to execute trades; I like to use the TD Ameritrade thinkorswim platform. This platform is easy to use and accessible on phones, laptops, and desktops. The thinkorswim platform allows you to have a paper trading account in which you can practice entering and exiting strategies. There are several stocks and options to choose from, just know you only need one. Having a day trading strategy is crucial, after all, anything without a plan is just known as impulsive. Impulse will lead you to not only lose money but if you ever do make a profit, it won’t be consistent.
You need to decide on a number you are comfortable using to start day trading. A good rule of thumb is an amount that if lost will not devastatingly hurt you. You also need to have a stop loss number in mind. This is a number that you are comfortable losing when a trade is going against you, and you need to exit. Keep your trading size small, so if a few trades go against you, it doesn’t wipe out your account. Remember, without capital you can’t enter into a trade, so you want to make sure you are making smart decisions.
Summary: Day Trading vs Investing
The reality is, that as much as you try to save, the growth rate of your savings account is just too low to create wealth. Investing and day trading with both, you make moves to build wealth and financial stability; it is just done differently. Both can put your family in a better financial situation and take time to develop. I can teach you how to day trade like the top 10% without a complicated strategy or any technical indicators, even if you are a beginner. My goal has always been to teach as many day traders to achieve their personal financial goals, whether they are novice traders or experienced traders.
The MK VIP training has plenty of resources to help you get started on reaching your day trading goals. I teach the working class how to earn $10,000 a month through day trading. I help my students avoid the challenges I faced when I first became a day trader. As of now, MK Financial LLC is already the #1-day trading coaching business in the US in just one year. You are just a click away from learning what you need to become a day trader with any amount of capital and take your family and finances to the next level.
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”