What is Investing and what is day trading?
Investing, or specifically long-term investing, consists of making trades that stay open for months, and often years. Contrarily, day trading is making trades that last for seconds or minutes taking advantage of short-term fluctuations in a stock's price. Investing involves buy-and-hold trades rather than quick, buy-and-sell-trades. The decision-making process for a day trade is quite different from a long-term investment and requires different skills. There is also a middle ground between investing and day trading called swing trading, which is when trades last for a few days to a few months. It is important to note while they both seem similar, it is not fair to compare the returns of each. They both have very different time commitments and skill set requirements.
so, Why invesT?
Investments Compound.
A good investment could result in a return of approximately 10% a year. While day trading can give you a figure of 10 to 60 percent a month, that is only with low capital. As capital increases, gains to do not increase proportionally.
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Check out this video on the power of compunding!
It's easier!
In order to invest, one just needs to know how to determine the best stock (We will teach you!). Once you feel confident, you place your money and hold your stocks rather than having to watch the market every minute to trade them.
Less to worry about.
Investments are often held for a period of years, taking advantage of perks like interest, dividends, and stock splits along the way. While markets inevitably fluctuate, investors "ride out" these downtrends with the expectation that any losses eventually will be recovered. Investors therefore only need to worry about market fundamentals, such as price/earnings ratios and management forecasts.
It can be a hobby that pays!
Investing can be a hobby that pays off - while trading is a job. Investing helps people build a ‘real wealth’ over time, rather than minor gains on a daily basis.
The Bottom Line
You can gain millions of dollars in long-term investments with little impact on performance, whereas day traders will likely start to see a decline in percentage performance even with an account of several hundred thousand dollars. As you gain more money by day trading, you end up trading more stocks until, after a point, it becomes impossible to keep track of it all, and you begin missing out on potential gains.