Chapter 16

Choosing among Investing, Trading, and Speculating

In This Chapter

arrow Understanding the differences among investing, trading, and speculating

arrow Checking out the tools of stock trading

arrow Sticking to important rules for safe trading

arrow Taking a few words of advice on speculating

You may have heard of stock trading and wondered how it compares to stock investing. While I’m at it, I may as well toss another verbal hand grenade — stock speculating. Rest assured that trading and investing are two different animals (speculating is a hybrid, and it can have a foot in both trading and investing).

Trading is advantageous when you’re looking to profit from short-term swings in the market due to volatility. However, trading can be dangerous because the market’s short-term movements can be quite unpredictable. The only reason I’m including trading in this book is because you, dear reader, should get some do’s and don’ts in this short-term venture. If you’re going to trade stocks, you should have some guidelines to keep the downside to a minimum. I explain what you need to know about trading ...

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