There is a question which is sometimes asked by those new to the financial markets, and even occasionally debated

by experienced participants. That question is how one differentiates between trading and investing.
Because both trading and investing – when one considers them from the perspective of the financial markets – are performed in very similar fashions, they are often thought of as interchangeable actions.

Both trading and investing, after all, are at the most simple of levels application of capital in the pursuit of profits. If I buy XYZ products I expect to either see the price appreciate or earn dividends – perhaps both.

What separates trading from investing, however, is that generally in trading one has an exit expectation. This might be in the form of a price target or in terms of how long the position will be held.

Either way, the trade is seen to have a finite life. Investing, on the other hand, is more open-ended. An investor will buy a company’s products with no predefined notion of when he or she will sell, if ever.

We can use examples to help demonstrate the difference. Warren Buffet is an investor. He buys companies which he sees as somehow undervalued and holds on to his positions for as long as he continues to like their prospects. He does not think in terms of a price at which he will exit the market .

George Soros is (or at least was while he was still actively running his hedge fund) a trader. His most famous trade was shorting the British Pound when he thought the currency was overvalued and ready to be withdrawn from the European Exchange Rate Mechanism.

The position he took was based on a specific circumstance. Once the Pound was allowed to float freely, and quickly devalued in the market, Soros exited with a handsome profit. That meets the criteria of having a predefined exit, making it a trade, not an investment.

There is another way one can define trading as set against investing, though. It has to do with the manner in which the applied capital is expected to produce a return. In trading the appreciation of capital is the objective.

You buy products at 10 expecting it to go to 15 and thereby produce a capital gain. If dividends or interest are paid out along the way, that is fine, but likely only a minor contribution to the expected profits.

In contrast, investing looks more toward income over time. That makes income production, such as dividends and bond interest payments, the major focal point. Do investors experience capital appreciation? Sure, but unlike in trading, that is not the prime motivation. Continue from here https://longrichtrading..com/2022/08/investing-vs-trading-what-is-difference.html?m=1

Trading and investing are two terms that are very different from each but often used interchangeably due to their similarities.

Actually used to confuse them until I stumbled on this article here - https://blog.bitmama.io/differences-between-trading-and-investing/. I hope you find it helpful too